eBook Problem Walk-Through Jarett & Sons's common stock currently trades at $27.00 a share.
It is expected to pay an annual dividend of $1.25 a share at the end of the year (D1 = $1.25), and
the constant growth rate is 5% a year. What is the company's cost of common equity if all of its
equity comes from retained earnings? Do not round intermediate calculations. Round your
answer to two decimal places.
If the company issued new stock, it would incur an 8% flotation cost. What would be the cost of
equity from new stock? Do not round intermediate calculations. Round your answer to two