Provide answer general Accounting question Kinslow Manufacturing Company paid a dividendyesterday of $2.50 per share. The dividend is expectedto grow at a constant rate of 5% per year. The price ofKinslow's common stock today is $25 per share. IfKinslow decides to issue new common stock, flotationcosts will equal $2.00 per share.Calculate the cost of new common stock.

Step 1: Define External FinancingA company's retained earnings are the internal financing sources…

Answered: Kinslow Manufacturing Company paid a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 8P

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L. Sanders Manufacturing paid a dividend last year of $5 per share. The dividend is expected to grow at a constant rate of 8% per year. The price of L. Sanders Manufacturing's stock today is $29 per share. If L. Sandaers Manufacturing decides to issue new common stock, flotation costs will equal $2.50 per share. Based on the above information, the cost of new common stock is OA. 28.38%. OB. 31.40%. OC. 26.62%. OD. 24.12%. OE. None of the above.
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