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Determine average annual dividend growth rate

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Reference no: EM132515848

Point 1: Ross Textiles wishes to measure its cost of common stock equity. The? firm's stock is currently selling for ?$62.01

Point 2: The firm just recently paid a dividend of ?$4.14

Point 3: The firm has been increasing dividends regularly. Five years? ago, the dividend was just ?$2.96

Point 4: After underpricing and flotation? costs, the firm expects to net ?$53.95

                                                                                             53.95 per share on a new issue.

Question 1: Determine average annual dividend growth rate over the past 5 years. Using that growth? rate, what dividend would you expect the company to pay next? year?

Question 2: Determine the net? proceeds, Nn?, that the firm will actually receive.

Question 3: Using the? constant-growth valuation? model, determine the required return on the? company's stock, r Subscript s rs?, which should equal the cost of retained? earnings, r Subscript r

Question 4: Using the? constant-growth valuation? model, determine the cost of new common? stock, r Subscript n

Reference no: EM132515848

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