Eakins Inc.\'s common stock currently sells for $45.00 per share, the company ex

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Eakins Inc.'s common stock currently sells for $45.00 per share, the company expects to earn $2.75 per share during the current year, its expected payout ratio is 70%, and its expected constant growth rate is 6.00%. New stock can be sold to the public at the current price, but a flotation cost of 8% would be incurred. By how much would the cost of new stock exceed the cost of retained earnings? a. 0.84% b. 0.09% c. 0.37% d. 0.19% e. 0.56% Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution

Eakins Inc.'s common stock currently sells for $45.00 per share, the company expects to earn $2.75 per share during the current year, its expected payout ratio is 70%, and its expected constant growth rate is 6.00%. New stock can be sold to the public at the current price, but a flotation cost of 8% would be incurred. By how much would the cost of new stock exceed the cost of retained earnings? a. 0.84% b. 0.09% c. 0.37% d. 0.19% e. 0.56% Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution Eakins Inc.'s common stock currently sells for $45.00 per share, the company expects to earn $2.75 per share during the current year, its expected payout ratio is 70%, and its expected constant growth rate is 6.00%. New stock can be sold to the public at the current price, but a flotation cost of 8% would be incurred. By how much would the cost of new stock exceed the cost of retained earnings? a. 0.84% b. 0.09% c. 0.37% d. 0.19% e. 0.56% Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution Eakins Inc.'s common stock currently sells for $45.00 per share, the company expects to earn $2.75 per share during the current year, its expected payout ratio is 70%, and its expected constant growth rate is 6.00%. New stock can be sold to the public at the current price, but a flotation cost of 8% would be incurred. By how much would the cost of new stock exceed the cost of retained earnings? a. 0.84% b. 0.09% c. 0.37% d. 0.19% e. 0.56% Eakins Inc.'s common stock currently sells for $45.00 per share, the company expects to earn $2.75 per share during the current year, its expected payout ratio is 70%, and its expected constant growth rate is 6.00%. New stock can be sold to the public at the current price, but a flotation cost of 8% would be incurred. By how much would the cost of new stock exceed the cost of retained earnings? Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution Hide FeedbackShow All Feedback Hide FeedbackShow All Feedback Check My Work Feedback Post Submission Feedback Solution Check My Work Feedback Post Submission Feedback Solution Check My Work Feedback Check My Work Feedback Check My Work Feedback Post Submission Feedback Post Submission Feedback Post Submission Feedback Solution Solution Solution

a. 0.84% b. 0.09% c. 0.37% d. 0.19% e. 0.56%

Explanation / Answer

0.84% is wrong. The correct answer is 0.37% becasue my teacher just worked this problem in class.

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