Homework #6F (Cost of equity financing)

Homework #6F (Cost of equity financing)


Question 2 (1 point)


Last year the Black Water Inc. paid dividends $2.31. Company’s dividends are expected to grow at an annual rate of 3% forever. The company’s common stock is currently selling on the market for $62.56. The investments banker will charge flotation costs $3.94 per share. Calculate the cost of common equity financing using Gordon Model.

Round the answers to two decimal places in percentage form. (Write the percentage sign in the “units” box).

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