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Cost of equity Corporation Beta sells common stock for $50 The floatation cost for new issue of stocks will be 5 percent The company pays 50 percent of its earnings in dividends and a $4 dividend

(Cost of equity) Corporation Beta sells common stock for $50. The floatation cost for new issue of stocks will be 5 percent. The company pays 50 percent of its earnings in dividends, and a $4 dividend was recently paid. Earnings per share 5 years ago were $5. Earnings are expected to continue to grow at the same annual rate in the future as during the past 5 years. The tax rate is 25 percent. Calculate (a) internal common equity and (b) external common equity

Apr 27 2020 View more View Less

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