Cost of common stock equity Ross Textileswishes to measure its cost of common stock equity. The firm's stockis currently selling for $41.16. The firm just recently paid adividend of $3.97. The firm has been increasing dividendsregularly. Five years ago, the dividend was just $2.99.

After underpricing and flotation costs, the firm expects to net$38.28 per share on a new issue.

a. Determine average annual dividend growth rate over the past 5years. Using that growth rate, what dividend would you expect thecompany to pay next year?

b. Determine the net proceeds, Nn, that the firm will actuallyreceive.

c. Using the constant-growth valuation model, determine therequired return on the company's stock, r Subscript srs, whichshould equal the cost of retained earnings, r Subscript rrr.

d. Using the constant-growth valuation model, determine the costof new common stock, r Subscript nrn.

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a.The average annual dividend growth rate over the past 5 yearsis ___ (Round to two decimal places.)

Using that growth rate, the dividend you expect the company topay next year is ___ (Round to two decimal places.)

b.The net proceeds, Nn, the firm will actually receive are ___(Round to two decimal places.)

c.Using the constant-growth valuation model, the cost ofretained earnings, r Subscript srs, is ____ (Round to two decimalplaces.)

d.Using the constant-growth valuation model, the cost of newcommon stock, r Subscript nrn, is ____ (Round to two decimalplaces.)