# Cost of Retained Earnings

A firm's stock is selling for $78. The next annual dividend is expected to be 2.70. The growth rate is 9%. The flotation cost is 5.00. What is the cost of retained earnings? A)13.09%, B)12.46%, C)12.75%, D)none of the above

© BrainMass Inc. brainmass.com June 3, 2020, 6:37 pm ad1c9bdddfhttps://brainmass.com/business/finance/cost-of-retained-earnings-67973

#### Solution Preview

The cost can be found using the dividend discount model

Cost = ...

#### Solution Summary

The solution explains how to calculate the cost of retained earnings using the dividend discount model

$2.19