Solution:
a)Calculation of growth rate
Gorwth rate=[(Current dividend/Five years ago dividend)^1/no. of years]-1
=[$4.12/$3.05]^1/5-1
=0.0620 or 6.20%
Dividend for next year(D1)=Current dividend(1+growth rate)
=$4.12(1+0.062)
=$4.38
b)Net Proceed=$39.40 per share
c)Calculation of cost of retained earning
Cost of retained earning=[D1/Current share Price]+growth rate
=[$4.38/$41.91]+0.062
=0.1665 or 16.65%
d)Calculation of cost of new common stock:
Cost of new common stock=[D1/Net Proceed]+Growth rate
=[$4.38/$39.40]+0.062
=0.1732 or 17.32%
Cost of common stock equity Ross Tantiles wishes to measure its cost of common stock equity....
3. Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for $58.74. The firm just recently paid a dividend of $3.97. The firm has been increasing dividends regularly. Five years ago, the dividend was just $2.95. After underpricing and flotation costs, the firm expects to net $54.63 per share on a new issue. a. Determine average annual dividend growth rate over the past 5 years. Using that...
P9-10 (similar to) Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for $40.99. The firm just recently paid a dividend of $4.04. The firm has been increasing dividends regularly. Five years ago, the dividend was just $2.99. After underpricing and flotation costs, the firm expects to net $37.30 per share on a new issue. a. Determine average annual dividend growth rate over the past 5 years....
P9-10 Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for $70.67. The firm just recently paid a dividend of $4. The firm has been increasing dividends regularly. Five years ago, the dividend was just $2.99. After underpricing and flotation costs, the firm expects to net $69 per share on a new issue. a. Determine average annual dividend growth rate over the past 5 years. Report your...
Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for $41.85. The firm just recently paid a dividend of $4.03. The firm has been increasing dividends regularly. Five years ago, the dividend was just $3.02. After underpricing and flotation costs, the firm expects to net $38.08 per share on a new issue. a. Determine average annual dividend growth rate over the past 5 years. Using that growth rate, what dividend would you...
Quesdon Help Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for $50.45. The fim just recently paid a dividend or 4. 11. The firm has been increasing divideryds regularly. Five years ago, the dividend was just $2.97 After underpricing and lotion costs, the fem expects to net 544 40 per share on a new issue a. Determine average annual dividend growth rate over the past 5...
Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for S77.77. The firm just recently paid a dividend of $4.11. The firm has been increasing dividends regularly. Five years ago, the dividend was just $3.05. After underpricing and flotation costs, the firm expects to net $71.55 per share on a new issue. a. Determine average annual dividend growth rate over the past 5 years. Using that growth...
P9-10 (similar to) EQuestion Help Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for $60.96. The firm just recently paid a dividend of $4.07. The firm has been increasing dividends regularly. Five years ago, the dividend was just $2.98 After underpricing and flotation costs, the firm expects to net $53.04 per share on a new issue. a. Determine average annual dividend growth rate over the past...
Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for $43.24. The firm just recently paid a dividend of $4.15. The firm has been increasing dividends regularly. Five years ago, the dividend was just $2.97. After under pricing and flotation costs, the firm expects to net $39.78 per share on a new issue. a. Determine average annual dividend growth rate over the past 5 years. Using that growth rate, what dividend would...
Question: P9-10 (7e) Ross Textiles wishes to measure its cost of common stock equity. The firm’s stock is c... P9-10 (7e) Ross Textiles wishes to measure its cost of common stock equity. The firm’s stock is currently selling for $57.50. The firm expects to pay a $3.40 dividend at the end of 2016. The dividends for the past four years are as follows: Year Dividend 2015 $3.10 2014 $2.92 2013 $2.60 2012 $2.30 2011 $2.12 After underwriting and floatation costs,...
I just need help with the 2nd part of a Thank you! Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The firm's stock is currently selling for $75.49. The firm just recently paid a dividend of $4.06. The firm has been increasing dividends regularly. Five years ago, the dividend was just $3.01. After underpricing and flotation costs, the firm expects to net $66.43 per share on a new issue. a. Determine average...