Caspian Sea Drinks needs to raise $84.00 million by issuing additional shares of stock. If the...
Caspian Sea Drinks needs to raise $84.00 million by issuing additional shares of stock. If the market estimates CSD will pay a dividend of $1.41 next year, which will grow at 4.25% forever and the cost of equity to be 10.37%, then how many shares of stock must CSD sell?
Round to 0 decimal places.
Homework Answers
| Price = Dividend in 1 year/(cost of equity - growth rate) |
| Price = 1.41/ (0.1037 - 0.0425) |
| Price = 23.04 |
NUmber of shares = amount to raise/price = 84000000/23.04
=
| 3645833 |
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