58 Mon 543 PM x Fashion NovaThan Queen Of Spades S ke jsp

?58% Mon 5:43 PM : x . Fashion Nova-Than, Queen Of Spades S. ) ke. jsp?course assessment id- 56981 1&course; ids 183900 1&content; id 844 Bookmarks People Window Help Take Test: Exam-3- ? Women\'s Shoes On x Your Shopping Cart × Question 3 of 5 Moving toanother question wil save this response. Question 3 20 points Save Answer Maxvell and Associates recently hired you to help estimate ita cost of common equity. You have obtained the tollowing datar Do 90.90: Po-27.50 flotation cost-4 and g 7.00s (constant). Based on the DCF approach, what is the cost of common from retained earnings? TTT? Paragraph: Arial ; 3(12? ; :-.-. T. t Moving so anther question will save this response 8 0

Solution

Cost of retained earnings = (D0*(1+g)/P0) + g

Cost of retained earnings = (0.90*(1+7%)/27.50) + 7%

Cost of retained earnings = 10.501818% or 10.50%

(For cost of retained earnings we dong have to incorporate flotation cost)