Long term dividend payout ratio =50%
Retention Ratio =100-50=50%
ROE=10%
Sustainable Growth Rate =Retention Ratio*ROE=5%
Required Rate of Return=(D1/P0)+g
P0=$47.75
D1/P0=Dividend Yield =5%
g=Growth Rate =5%
R=Required Return =5+5=10%
Flotation Cost of new equity =10%=0.1
Cost of New Equity =R/(1-0.1)=10/0.9=11.11%
Cost of New Equity | 11.11% |
Banyan Co.'s common stock currently sells for $47.75 per share. The growth rate is a constant...
Banyan Co.’s common stock currently sells for $47.75 per share. The growth rate is a constant 12.6%, and the company has an expected dividend yield of 6%. The expected long-run dividend payout ratio is 30%, and the expected return on equity (ROE) is 18%. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of new equity? Round your answer to two decimal places....
Banyan Co.'s common stock currently sells for $30.75 per share. The growth rate is a constant 8%, and the company has an expected dividend yield of 4%. The expected long-run dividend payout ratio is 20%, and the expected return on equity (ROE) is 10.0%. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of new equity? Do not round intermediate calculations. Round your...
Banyan Co.’s common stock currently sells for $36.75 per share. The growth rate is a constant 8%, and the company has an expected dividend yield of 6%. The expected long-run dividend payout ratio is 20%, and the expected return on equity (ROE) is 10.0%. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of new equity? Do not round intermediate calculations. Round your...
Banyan Co.’s common stock currently sells for $40.25 per share. The growth rate is a constant 6%, and the company has an expected dividend yield of 4%. The expected long-run dividend payout ratio is 40%, and the expected return on equity (ROE) is 10.0%. New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. What would be the cost of new equity? Do not round intermediate calculations. Round your...
Banyan Co.’s common stock currently sells for $54.25 per share. The growth rate is a constant 6%, and the company has an expected dividend yield of 6%. The expected long-run dividend payout ratio is 20%, and the expected return on equity (ROE) is 7.5%. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of new equity? Do not round intermediate calculations. Round your...
Banyan Co.’s common stock currently sells for $48.25 per share. The growth rate is a constant 4%, and the company has an expected dividend yield of 6%. The expected long-run dividend payout ratio is 50%, and the expected return on equity (ROE) is 8.0%. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of new equity? Do not round intermediate calculations. Round your...
10. Banyan Co.’s common stock currently sells for $53.25 per share. The growth rate is a constant 5%, and the company has an expected dividend yield of 6%. The expected long-run dividend payout ratio is 50%, and the expected return on equity (ROE) is 10.0%. New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. What would be the cost of new equity? Do not round intermediate calculations. Round...
Banyan Co.'s common stock currently sells for $46.75 per share. The growth rate is a constant 3%, and the company has an expected dividend yield of 4%. The expected long-run dividend payout ratio is 50%, and the expected return on equity (ROE) is 6.0%. New stock can be sold to the public at the current price, but a flotation cost of 15% would be incurred. What would be the cost of new equity? Do not round intermediate calculations. Round your...
Banyan Co.'s common stock currently sells for $39.75 per share. The growth rate is a constant 6%, and the company has an expected dividend yield of 3%. The expected long-run dividend payout ratio is 20%, and the expected return on equity (ROE) is 7.5%. New stock can be sold to the public at the current price, but a flotation cost of 15% would be incurred. What would be the cost of new equity? Do not round intermediate calculations. Round your...
Banyan Co.’s common stock currently sells for $41.00 per share. The growth rate is a constant 13.5%, and the company has an expected dividend yield of 4%. The expected long-run dividend payout ratio is 25%, and the expected return on equity (ROE) is 18%. New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. What would be the cost of new equity? Round your answer to two decimal places....