Builtrites common stock is currently selling for 48 a share, Financial Management

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Builtrites common stock is currently selling for 48 a share

Builtrites common stock is currently selling for $48 a share and the firm just paid an annual dividend of $2.30 per share. Management believes that dividends and earnings should grow at 8% annually. Since new stock would need to be sold to finance an expansion. builtrites expects flotation costs to be 5% of the expected selling price of $48 a share. Based on this and a marginal tax rate of 34%, what is the cost of new common stock?

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Financial Management: Builtrites common stock is currently selling for 48 a share

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Financial Management: Builtrites common stock is currently selling for 48 a share

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