Marigold Inc

Multiple Choice

Marigold Inc.'s common stock currently sells for $40 per share, but the firm will net only $34 per share from the sale of new common stock. The firm recently paid a dividend of $2 per share on its common stock, and investors expect the dividend to grow indefinitely at a constant rate of 10 percent per year. Which of the following is the cost of newly issued common stock? (Round off the answer to two decimal places.)

A) 12.24 percent
B) 13.56 percent
C) 14.12 percent
D) 16.47 percent
E) 17.53 percent