A firm has $5 million in retained earnings. The market price of the firm's common stock is $55. The firm recently paid a dividend of $3.70. Earnings and dividends are expected to increase at an annual rate of 9 percent. When new common stock is issued, flotation costs amount to 4 percent of market price. What is the firm's cost of external equity financing?
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Home » Business » A firm has $5 million in retained earnings. The market price of the firm's common stock is $55. The firm recently paid a dividend of $3.70. Earnings and dividends are expected to increase at an annual rate of 9 percent.