Jiffy Co expects to pay a dividend of $3.00 per share in one year. The current price of Jiffy common
stock is $60 per share. Flotation costs are $3.00 per share when Jiffy issues new stock.
What is the
cost of internal common equity (retained earnings) if the long-term growth in dividends is
projected to be 8 percent indefinitely?
A) 16 percent B) 14 percent C) 15 percent D) 13 percent
D
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