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Business, 21.11.2019 04:31 pinky1509

Afirm has common stock with a market price of $100 per share and an expected dividend of $5.61 per share at the end of the coming year. a new issue of stock is expected to be sold for $98, with $2 per share representing the underpricing necessary in the competitive capital market. flotation costs are expected to total $1 per share. the dividends paid on the outstanding stock over the past five years are as follows:

yeardividend

1$ 4.00

24.28

34.58

44.90

55.24

the cost of this new issue of common stock is

a) 5.8 percent.

b) 7.7 percent.

c) 10.8 percent.

d) 12.8 percent.

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