Calculate cost of internal common-external common equity

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Reference no: EM132029073

The common stock for the Bestsold Corporation sells for $63. If a new issue is sold, the flotation costs are estimated to be 11 percent. The company pays 60 percent of its earnings in dividends, and a $3.60 dividend was recently paid. Earnings per share 6 years ago were $4.00. Earnings are expected to continue to grow at the same annual rate in the future as during the past 6 years. The? firm's marginal tax rate is 32 percent. Calculate the cost of (a) internal common equity and (b) external common equity.

Reference no: EM132029073

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