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mantparn mantparn
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7 years ago
A firm has common stock with a market price of $100 per share and an expected dividend of $5.61 per share at the end of the coming year. A new issue of stock is expected to be sold for $98, with $2 per share representing the underpricing necessary in the competitive capital market. Flotation costs are expected to total $1 per share. The dividends paid on the outstanding stock over the past five years are as follows:



The cost of this new issue of common stock is ________.
A) 5.8 percent
B) 7.7 percent
C) 10.8 percent
D) 12.8 percent
Textbook 
Principles of Managerial Finance

Principles of Managerial Finance


Edition: 14th
Authors:
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alovelyalovely
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7 years ago
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mantparn Author
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#2
7 years ago
Thanks for the assistance, I've marked your post as best answer
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