Homework Answers
d. ke=D1/P0 + g
D1=0.21, P0=$13, g= 11%
So, Ke=0.21/13 +0.11 =0.126153=12.62%
e. When there is a floatation cost, kn= D1/(P0-f) + g
where f=$2 i.e. floatation cost.
So, kn=0.21/(13-2) +0.11 = 0.12909 =12.91%
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