Micro Brew (MB)is Considering Issuing New Common Stock

question 61

Multiple Choice

Micro Brew (MB) is considering issuing new common stock.MB currently trades at $32.50 a share and MB's investment bankers estimate that it will cost $2.30 a share to issue new common stock.What is MB's estimated cost of new common shares,if the firm's cost of retained earnings is 12.01%?

• A) 8.50%
• B) 12.25%
• C) 13.02%
• D) 15.00%

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