J Ross and Sons Inc

question 41

Multiple Choice

J. Ross and Sons Inc. has a target capital structure that calls for 40 percent debt, 10 percent preferred stock, and 50 percent common equity. Ross' common stock currently sells for $40 per share. The firm recently paid a dividend equal to $2 per share on its common stock, and investors expect the dividend to grow indefinitely at a constant rate of 10 percent per year. If it issues new common stock, the firm will incur flotation costs equal to 7 percent. What is the firm's cost of retained earnings?

• A)15.00%
• B)15.91%
• C)15.50%
• D)14.54%
• E)16.50%

---

Definitions:

Panic Disorder

A psychiatric disorder characterized by sudden and repeated attacks of intense fear that may include physical symptoms, such as heart palpitations, dizziness, or abdominal distress.

Phobias

Persistent, irrational fears of specific objects, activities, or situations that lead to a desire to avoid such objects or situations.

Somatosensory

Relating to the body's sensory system that processes touch, temperature, pain, and proprioception.

Motor Systems

The components of the central and peripheral nervous system that are involved in the movement control of muscles.