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GoldRush.com's common stock sells for $57 per share, and the flotation costs of a new...

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Finance

GoldRush.com's common stock sells for $57 per share, and the flotation costs of a new common stock issue are expected to be 12 percent. The firm's dividend payout ratio is 60%, and it just paid a $5.40 dividend. Its earnings per share (EPS) 4 years ago were $7.00. And its earnings growth rate is expected to continue at the same rate in the future as that in the past 4 years. The firm's marginal tax rate is 34%. Answer the following questions.

What is the firm's cost of internal common equity?

(Round to two decimal places.)

b. What is the firm's cost of external common equity?

(Round to two decimal places.)

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