What Would Be the Cost of New Common Stock Equity

question 97

Multiple Choice

What would be the cost of new common stock equity for Tangshan Mining if the firm just paid a dividend of $4.25, the stock price is $55.00, dividends are expected to grow at 8.5 percent indefinitely, and flotation costs are $6.25 per share?

• A) 17.96%
• B) 16.88%
• C) 9.46%
• D) none of the above

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