Grandview Inc. will issue new common stock to finance an expansion. The existing common stock just paid a $1.50 dividend, and dividends are expected to grow at a constant rate 8% indefinitely. The stock sells for $45, and flotation expenses of 5% of the selling price will be incurred on new shares. What is the cost of retained earnings for Grandview

11.79%

Explanation:

Cost of Retained earnings is calculated by the formula;

= (Next dividend / ( Price - Net price) ) + growth rate

= ((1.50 * 1.08) /( 45 - (45 * 5%) ) + 8%

= 11.79%

urban company reports the following information regarding its production cost: units produced 37,000 units direct labor $ 30 per unit direct materials $ 35 per unit variable overhead $ 237,000 in total fixed overhead $ 127,000 in total