Keystone Corporation will issue new common stock to finance an expansion. The existing common
stock just paid a $1.50 dividend, and dividends are expected to grow at a constant rate 8%
indefinitely.
The stock sells for $45, and flotation expenses of 5% of the selling price will be incurred
on new shares. What is the cost of new common stock be for Keystone Corp?
A) 11.33% B) 12.53% C) 11.60% D) 11.79% E) 11.51%
D
Business
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