In Calculating the Cost of New Common Stock Using the Constant

question 132

Multiple Choice

In calculating the cost of new common stock using the constant dividend growth model, it is important that the __________ are subtracted from the price of the stock.

• A) flotation costs
• B) par value
• C) cost of retained earnings
• D) proceeds of the sale

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Definitions:

Exchange Student

A student who attends school or university in another country through an exchange program.

Probability

A numerical gauge on a scale from 0 to 1 reflecting how likely an event is to occur.

Asia

A continent located primarily in the Eastern and Northern Hemispheres, known as the largest and most populous continent.

Deck

A platform, typically outdoors, attached to a building; or, a collection of playing cards or slides used in a presentation.