Question: Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for $57.50. The firm expects to pay a $3.40 dividend at the end of the year (2016). The dividends for the past 5 years are shown in the following table.

After underpricing and flotation costs, the firm expects to net $52 per share on a new issue.

1. Determine the growth rate of dividends from 2011 to 2015 .
2. Determine the net proceeds, \(N_{n}\), that the firm will actually receive.
3. Using the constant-growth valuation model, determine the cost of retained earnings, \(r_{r}\)
4. Using the constant-growth valuation model, determine the cost of new common stock, \(r_{n}\)

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