Using Gordon Growth Model,
(Stock Price - Flotation Cost) = D0(1 + g)/(r - g)
68.93 - 2.67 = 3.17(1.05)/(r - 0.05)
r = 10.02%
Cost of Equity Financing = 10.02%
Last year the Black Water Inc. paid dividends $3.17. Company's dividends are expected to grow at...
Last year the Black Water Inc. paid dividends $4.44. Company’s dividends are expected to grow at an annual rate of 2% forever. The company’s common stock is currently selling on the market for $61.01. The investments banker will charge flotation costs $3.03 per share. Calculate the cost of common equity financing using Gordon Model.
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Buspru Inc. paid dividends per share of 2,59 in 2019, and dividends are expected to grow 1,87% per year forever. The stock has a beta of 0.85, and the Treasury bond rate is 2%. Use a risk premium of 5%. a) What is the value per share 31 December 2019? b) The stock was trading for $70 per share. What would the growth rate in dividends have to be to justify this price? c) What issues, if any, does the...
The common stock of NCP paid $1.45 in dividends last year. Dividends are expected to grow at an annual rate of 6.40 percent for an indefinite number of years. a. If NCP's current market price is $23.05 per share, what is the stock's expected rate of return? b. If your required rate of return is 8.4 percent, what is the value of the stock for you? c. Should you make the investment?
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