A Firm Is Determining Its Cost of Common Stock Equity

question 71

Multiple Choice

A firm is determining its cost of common stock equity. It last paid a dividend of $0.52, the dividends are growing at 5%, flotation costs are $2 per share, and the firm will net $72 per share upon the sale of the stock. What is the firm's cost of common equity?

• A) 3.49%
• B) 8.22%
• C) 6.11%
• D) 5.76%