Costly Corporation is considering using equity financing. Currently, the firm's stock is selling for $26.00...
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Costly Corporation is considering using equity financing. Currently, the firm's stock is selling for $26.00 per share. The firm's dividend for next year is expected to be $4.90 with an annual growth rate of 8.0% thereafter indefinitely. If the firm issues new stock, the flotation costs would equal 11.0% of the stock's market value. The firm's marginal tax rate is 40%. What is the firm's cost of internal equity? A.30.87% B.29.18% C.28.35% D.26.85% E.25.31%
A.30.87%
B.29.18%
C.28.35%
D.26.85%
E.25.31%
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