Common equity investors of Adventure Outfitter Corp. require a 18.4% return. The flotation costs of selling…

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Common equity investors of Adventure Outfitter Corp. require a 18.4% return. The flotation costs of selling…

Common equity investors of Adventure Outfitter Corp. require a 18.4% return. The flotation costs of selling the stock amount to 4.9% of the selling price. The dividends are expected to grow at the 4.7% annual rate forever. Find the cost of new equity for the company, in %, to the nearest 0.01% (drop the % symbol when recording the answer).

Note: Use the alternative formula for finding the cost of new equity (on the instructor’s handout; the formula in the text is incorrect).

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Reference no: EM132069492

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