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Question
The common stock for El Viss Company currently sells for $20 per share. The firm just paid a dividend of $1.50, and the dividend three years ago was $1.30. Dividends per share are anticipated to grow at the same rate in the future as they have over the past three years. Flotation costs for new shares will be 6% of the selling price. Calculate the following:a. the cost of retained earnings
b. the cost of external equity capital
Answer
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