The cost of external equity capital raised by issuing new common stock (r?)is defined as follows, in words: "The cost of external equity equals the cost of equity capital from retaining earnings (rs), divided by one minus the percentage flotation cost required to sell the new stock, (1 - F)."

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this statement is t only if the expected growth rate is zero.Here are some illustrative numbers that show that the statement is t if g = 0 but f otherwise. 11ea1b84_8ba8_5812_a54a_f3809654165b_TB3581_00

The Cost of External Equity Capital Raised by Issuing New