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    Cost of Retained Earnings

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    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

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    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