What is the firms after-flotation cost of retained earnings

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Suppose that a firm has common stock that currently trades for $54.65 in the marketplace, paid an annual dividend last year of $3.25, and has flotation costs of 13.13%. Also, the firm in question had this year $105 million in EBIT, $25 million in interest expenses, $25 million in tax liability, $25 in dividends that is paid to common shareholders, and a return on equity of 12%. What is the firm's after-flotation cost of retained earnings?

a. 10.66 %

b. 12.15 %

c. 13.29 %

d. 15.19 %

Reference no: EM131308148

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