Jarett & Sons's common stock currently trades at $35.00 a share. It is expected to pay...

Jarett & Sons's common stock currently trades at $35.00 a share. It is expected to pay an annual dividend of $2.75 a share at the end of the year (D1 = $2.75), and the constant growth rate is 6% a year.

a) What is the company's cost of common equity if all of its equity comes from retained earnings? Round your answer to two decimal places. Do not round your intermediate calculations.

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b) If the company issued new stock, it would incur a 13% flotation cost. What would be the cost of equity from new stock? Round your answer to two decimal places. Do not round your intermediate calculations.

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Expert Solution

jeff jeffy answered 2 years ago

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