Javits Sons Common Stock Currently Trades At 30 00 A Share It Is Expected To Pay

Javits & Sons’ common stock currently trades at $ 30.00 a share. It is expected to pay an annual dividend of $ 3.00 a share at the end of the year ( D1 =$ 3.00), and the constant growth rate is 5% a year. a. What is the company’s cost of common equity if all of its equity comes from retained earnings? b. If the company issued new stock, it would incur a 10% flotation cost. What would be the cost of equity from new stock?

 

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