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August 21, 2014

Homework Help: Finace

Posted by Barbie on Saturday, September 15, 2012 at 1:54pm.

Wheel has just paid a dividend of $2.50 per share. The dividends are expected to grow at a constant rate of six percent per year forever. If the stock is currently selling for $50 per share with a 10% flotation cost, what is the cost of new equity for the firm? What are the advantages and disadvantages of using this type of financing for the firm?

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