Your Company's Stock Sells for $50 Per Share,its Last Dividend

Multiple Choice

Your company's stock sells for $50 per share,its last dividend (D₀) was $2.00,its growth rate is a constant 5 percent,and the company would incur a flotation cost of 15 percent if it sold new common stock.Net income for the coming year is expected to be $500,000,the firm's payout ratio is 60 percent,and its common equity ratio is 30 percent.If the firm has a capital budget of $1,000,000,what component cost of common equity will be built into the WACC for the last dollar of capital the company raises?

A) 9.20%
B) 9.94%
C) 10.50%
D) 11.75%
E) 12.30%