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Cost of common equity

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Reference no: EM13689040

Javits & Sons common stock currently trades at $30 a share. It is expected to pay an annual dividend of $3.00 a share at the end of the year (D1= $3.00) and the constant growth rate is 5% a year. 

A) what is the company's cost of common equity if all of its equity comes from retained earnings?

B) If the company were to issue new stock, it would incur a 10% flotation cost. What would the cost of equity from new stock be?

Reference no: EM13689040

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