Question

Jones Distributing Corp. can sell common stock for $27 per share and its investors require a 17% return. However, the administrative or flotation costs associated with selling the stock amount to $2.70 per share. What is the cost of capital for Jones Distributing if the corporation raises money by selling common stock?

Answer 1

What is this nonsense about investors requiring a 17% return????

Stock holders cannot require any amount of return in a publicly traded company!!