Martin Corporation's Common Stock Is Currently Selling for $50 Per

question 49

Multiple Choice

Martin Corporation's common stock is currently selling for $50 per share.The current dividend is $2.00 per share.If dividends are expected to grow at 6 percent per year and if flotation costs are 10 percent,then what is the firm's cost of retained earnings and what is its cost of new common stock?

• A) 10.71%;10.24%
• B) 10.24%;10.71%
• C) 10.24%;11.38%
• D) 11.38%;10.71%
• E) 9.31%;9.86%

---

Definitions:

Personality Development

The gradual and enduring changes in a person's behavior and thought patterns over the course of their life.

Oedipus Complex

A Freudian theory proposing that a child feels a subconscious sexual attraction to the opposite-sex parent and hostility toward the same-sex parent.

Defense Mechanisms

Psychological strategies employed unconsciously to protect oneself from anxiety arising from unacceptable thoughts or feelings.

Repression

A defense mechanism where stressful thoughts or memories are unconsciously pushed out of conscious awareness.