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Internal and external equity - Javits & Sons' common stock i

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Javits & Sons' common stock is currently trading at $30 a share. The stock is expected to pay
a dividend of $3.00 a share at the end of the year (D1  $3.00), and the dividend is expected to
grow at a constant rate of 5 percent a year. If the company were to issue external equity, it
would incur a 10 percent flotation cost. What are the costs of internal and external equity?

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This solution is comprised of a detailed explanation to answer what are the costs of internal and external equity for Javits&Sons.

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Internal and external equity
Javits & Sons' common stock is currently trading at $30 a share. The stock is expected to pay a dividend of $3.00 a share at the end of the year (D1 $3.00), and the dividend is expected to grow at a ...

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