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Business, 18.12.2019 17:31 johnny2585

Use the dividend growth model to determine the required rate of return for equity. your firm intends to issue new common stock. your investment bankers have determined that you should offer the stock at a price of $45.00 per share and you should anticipate paying a dividend of $1.50 in one year. if you anticipate a constant growth in dividends of 3.50% per year and the investment banking firm will take 7.00% per share as flotation costs, what is the required rate of return for this issue of new common stock?

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