What is the cost of new common stock

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Problem 1: Fedland Inc. will issue new common stock to finance an expansion. The existing common stock just paid a $3.50 dividend, with dividends expected to grow at a constant rate of 5% indefinitely. The stock sells for $40.00 and flotation expenses of 4% of the selling price will be incurred on new shares. What is the cost of new common stock?

Reference no: EM132761428

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