The dividend is expected to grow at a constant rate of 7 percent per year. The stock currently sells for $42 a share. If the company issues additional stock, it must pay its investment banker a flotation cost of $1.00 per share. What is the cost of external equity, ke? 5. Friendly Fire Armor Company has the following capital structure: Debt: 35%, kd =7.5%; Equity 65%, ke =14% Friendly Fire"s accountant estimates that they can sell $70,000 in equity at current prices. Then, to attract new investors, Friendly Fire will have to lower the sales price of new equity by 10%. Where is the breakpoint for equity?