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The Current Market Price of a Common Stock Is $22

Question 88

Multiple Choice

The current market price of a common stock is $22.50. The annual dividend just paid was $1.70 per share. It is expected to grow indefinitely at 6%. What is the cost of new equity if floatation costs are 15%?


A) 13.56%
B) 14.01%
C) 14.89%
D) 15.42%
E) 16.07%

Correct Answer:

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