TMM67
May 31, 2012, 10:17 AM
AAA stock is trading for $50.00. It has just paid a dividend (D0) of $3.00 per share, and this dividend is expected to grow at a rate of 3.0% per year. If the company were to issue new stock, the flotation costs would be 7.0%. Find the company's required return on equity for cost of capital purposes.