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This question is based on the following information: Pitts Company’s common stock is selling at P 82/share. Last year, the Dividends per share was P 4. The dividend is expected to grow at 25% yearly, Flotation cost is P 2/share.  What is the cost of retained earnings? a. 31.10% b. 31.25% c. 32.25% d. 33.25% P 2/share. What is the cost of the new common stock

This question is based on the following information: Pitts Company’s common stock is selling at P 82/share. Last year, the Dividends per share was P 4. The dividend is expected to grow at 25% yearly, Flotation cost is P 2/share.  What is the cost of retained earnings? a. 31.10% b. 31.25% c. 32.25% d. 33.25% P 2/share. What is the cost of the new common stock

Corporate Fin Focused Approach
Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter9: The Cost Of Capital
Section: Chapter Questions
Problem 5P
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This question is based on the following information: Pitts Company’s common stock is selling at P 82/share. Last year, the Dividends per share was P 4. The dividend is expected to grow at 25% yearly, Flotation cost is P 2/share. 

  1. What is the cost of retained earnings?

    a. 31.10%
    b. 31.25%
    c. 32.25%
    d. 33.25%


  2. P 2/share. What is the cost of the new common stock?

    a. 31.25%
    b. 32.25%
    c. 33.25%
    d. 34.25%


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