Homework Answers
Solution:-
Price of share = $22
Flotation cost = 10%
Net price after flotation cost ( P0)=$22*(1-0.10)= $19.80
Next annual dividend ( D1) = $0.67
Growth rate (g) = 4%
Cost of equity = (D1/P0) + g
Cost of equity = ($0.67/$19.80) + 0.04= 7.38%
Add Answer to:
Suppose that Brown-Murphies' common shares sell for $22.00 per share, that the firm is expected to...
11-23 Floatation cost. Please use Excel to show formula. 11-22 WACC Weights WhackAmOle has 2 million...
11-23 Floatation cost. Please use Excel to show formula.
11-22 WACC Weights WhackAmOle has 2 million shares of common stock outstanding, 1.5 million shares of preferred stock outstanding, and 50,000 bonds. If the common shares are selling for $63 per share, the preferred shares are selling for $52 per share, and the bonds are selling for 103 percent of par, what would be the weights used in the calculation of WhackAmOle's WACC? (LG11-4) 11-23 Flotation Cost Suppose that Brown-Murphies' common...
305,000 shares of common stock selling for $66.10 per share. The stock has a beta of...
305,000 shares of common stock selling for $66.10 per share. The stock has a beta of 1.02 and will pay a dividend of $4.30 next year. The dividend is expected to grow by 5.1 percent per year indefinitely. What is the cost of equity? Please show work
What would be the cost of new common stock equity for Tangshan Mining if the firm...
What would be the cost of new common stock equity for Tangshan Mining if the firm just paid a dividend of $4.25, the stock price is $55.00, dividends are expected to grow at 8.5 percent indefinitely, and flotation costs are $6.25 per share? A)16.88% B) 9.46% C) 17.96% D) none of the above
4. [Ch 10] Sound & Vision Studios (SVS) has 6 million common shares outstanding which sell...
4. [Ch 10] Sound & Vision Studios (SVS) has 6 million common shares outstanding which sell for $25 per share. SVS management is expected to set the next annual dividend at $2.50 per share, and investors and analysts expect all future dividends to grow by 7% per year, indefinitely. The current risk-free rate is 5.50%, the expected return on the market is 10%, and the stock has a beta of 2.2. SVS also has 1 million shares of 6% preferred...
Sunny Day Manufacturing Company has a current stock price of $33.35 per share, and is expected...
Sunny Day Manufacturing Company has a current stock price of $33.35 per share, and is expected to pay a per-share dividend of $2.03 at the end of the year. The company’s earnings’ and dividends’ growth rate are expected to grow at the constant rate of 8.70% into the foreseeable future. If Sunny Day expects to incur flotation costs of 3.750% of the value of its newly-raised equity funds, then the flotation-adjusted (net) cost of its new common stock (rounded to...
COST OF COMMON EQUITY. A firm's common stock currently sells for $25 per share. The firm...
COST OF COMMON EQUITY. A firm's common stock currently sells for $25 per share. The firm recently paid a dividend of $2.40 per share on its common stock, and investors expect the dividend to grow indefinitely at a constant rate of 3 percent per year. Calculate the firm's cost of retained earnings using the DCF approach.
Oriole Inc.’s common shares currently sell for $40 each. The firm’s management believes that its shares...
Oriole Inc.’s common shares currently sell for $40 each. The firm’s management believes that its shares should really sell for $50 each. The firm just paid an annual dividend of $2 per share and management expects those dividends to increase by 2 percent per year forever (and this is common knowledge to the market). Collapse question part (a1) What is the current cost of common equity for the firm? (Round final answer to 2 decimal places, e.g. 15.25%.) The current...
Your firm recently paid a dividend of $4 to common stockholders. Dividends are expected to grow...
Your firm recently paid a dividend of $4 to common stockholders. Dividends are expected to grow at 8% per year for the foreseeable future. The current stock price is $54. New shares could be sold for the same price, but flotation costs would amount to $6 per share. A $15 million bank line of credit is available with an interest rate of 9%. The firm's tax rate is 34%. What is the firm’s cost of capital if their capital structure...
The common stock of a firm sells for $77.77 per share. The stock is expected to...
The common stock of a firm sells for $77.77 per share. The stock is expected to pay $1.89 per share next year (current dividend plus next year's growth) when the annual dividend is distributed. The market rate of return on this stock is 7.32%. What is the market's expected future growth rate of the dividend? 2.43% 9.75% 7.32% 4.89%
Question 19 Colemans common stock is currently selling for $50 share. Its last dividend (Do) was...
Question 19 Colemans common stock is currently selling for $50 share. Its last dividend (Do) was $4.19; and dividends are expected to grow at a constant rate of 5 percent in the foreseeable future. Coleman estimates that if it issues new common stock, the flotation cost will be 10 percent. Coleman incorporates the flotation costs into the DCF approach. What is the estimated cost of newly issued common stock, considering the flotation cost?
11-23 Floatation cost. Please use Excel to show formula.
11-22 WACC Weights WhackAmOle has 2 million shares of common stock outstanding, 1.5 million shares of preferred stock outstanding, and 50,000 bonds. If the common shares are selling for $63 per share, the preferred shares are selling for $52 per share, and the bonds are selling for 103 percent of par, what would be the weights used in the calculation of WhackAmOle's WACC? (LG11-4) 11-23 Flotation Cost Suppose that Brown-Murphies' common...
4. [Ch 10] Sound & Vision Studios (SVS) has 6 million common shares outstanding which sell for $25 per share. SVS management is expected to set the next annual dividend at $2.50 per share, and investors and analysts expect all future dividends to grow by 7% per year, indefinitely. The current risk-free rate is 5.50%, the expected return on the market is 10%, and the stock has a beta of 2.2. SVS also has 1 million shares of 6% preferred...
Question 19 Colemans common stock is currently selling for $50 share. Its last dividend (Do) was $4.19; and dividends are expected to grow at a constant rate of 5 percent in the foreseeable future. Coleman estimates that if it issues new common stock, the flotation cost will be 10 percent. Coleman incorporates the flotation costs into the DCF approach. What is the estimated cost of newly issued common stock, considering the flotation cost?
Most questions answered within 3 hours.
-
A flow rate of 0.4 m / s of air enters a compressor at 100 kPa....
asked 9 minutes ago -
Write a balanced chemical equation for the reaction between HCl
and NaOH. Be sure to include...
asked 13 minutes ago -
A 200 g mass is gently hung on a vertical spring which stretches
it 20cm before...
asked 16 minutes ago -
Elaborate on some of the difficulties in determine the value of
information, as well as the...
asked 12 minutes ago -
A person wants to use a lever to lift a dumpster weighing 4700
N. The lever...
asked 17 minutes ago -
Hello,
Can you assist with the 2 part multiple choice question?
1A) Which of the following...
asked 33 minutes ago -
A municipal bond you are considering as an investment currently
pays a yield of 6.82 percent....
asked 37 minutes ago -
My Ebook is already expired. How could I keep using it since it
is very helpfull...
asked 45 minutes ago -
describe in detail your "perfect" place to study in your home
giving great detail to how...
asked 1 hour ago -
Decide with a brief explanation of the following statements
about reaction rates and catalysis are true:...
asked 1 hour ago -
Write a grading program in Java for a class with the following
grading policies: There are...
asked 1 hour ago -
Can someone explain the process of this Display a text
file program and show the supposed...
asked 1 hour ago