Gabex Factory’s ordinary shares are currently selling for R 96 per share, with a current dividend (Do) of R 6.60 per share. The firm’s dividends have been growing at an annual rate of 5% and this rate is expected to continue in the future. Gabex will offer shares at a discount of 4% per share and flotation costs are expected to amount to R4 per share.
Calculate the cost of new ordinary shares for the Gabex Factory. Show all calculations.
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