You were recently hired by Garrett Design, Inc. to estimate its cost of common equity. You obtained the following data: the expected dividend is $1.75; current stock price= $42.50; growth rate is 7.00%. Flotation costs amount to 5.00% of the selling price. What is the cost of equity raised by selling new common stock? 10.77% 11.33% 12.50% O 11.90% 13.12%

You were recently hired by Garrett Design, Inc. to estimate its cost of common equity. You obtained the following data: the expected dividend is $1.75; current stock price= $42.50; growth rate is 7.00%. Flotation costs amount to 5.00% of the selling price. What is the cost of equity raised by selling new common stock? 10.77% 11.33% 12.50% O 11.90% 13.12%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 5MC

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