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    Equity cost of retained earnings

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    A Company's common stock is currently selling for $40.00 per share. Its most recent dividend was $1.60, and the financial community expects that its dividend will grow at 10% per year in the foreseeable future.

    I. What is the company's equity cost of retained earnings?
    II. If the company sells new common stock to finance new projects and must pay $2.00 per share in flotation cost, what is the cost of equity?

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    https://brainmass.com/economics/finance/equity-cost-retained-earnings-132448

    Solution Preview

    Company's common stock is currently selling for $40.00 per share. Its most recent dividend was $1.60, and the financial community expects that its dividend ...

    Solution Summary

    Equity costs of retained earnings are analyzed.

    $2.49

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