ZuoTi.Pro
Question

A company just paid a $2.8 per share dividend on its common stock (DO = $2.8). The dividend is expected to grow at a constant
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Cost of external equity D1-[POx(1-F)]+g Here, 40.00 Stock price (PO) Expected dividend (D1) Flotation cost (F) Growth rate (g

*Please rate thumbs up

0 0
Add a comment
Know the answer?
Add Answer to:
A company just paid a $2.8 per share dividend on its common stock (DO = $2.8)....
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • The MNO Corporation just paid a dividend of $2.00 per share on its common stock. The...

    The MNO Corporation just paid a dividend of $2.00 per share on its common stock. The company is expected to maintain a constant 5 percent growth rate in its dividends indefinitely. If the stock sells for $40 a share, what is the company’s cost of equity?

  • Problem1: The XYZ Co. just paid a dividend of $1.95 per share on its stock. The...

    Problem1: The XYZ Co. just paid a dividend of $1.95 per share on its stock. The dividends are expected to grow at a constant rate of 4% per year indefinitely. Assume investorsrequire a return of 10.5 % on the XYZ Co. stock. What will the price be in 3 years? Show yourwork/calculations Problem2: The ABCorp. paid an annual dividend of $1.37 a share last month. Today, the company announced that future dividends will be increasing by 2.8 percent annually. If...

  • A company just paid this year's dividend of $3.50 per share on its stock. The dividend...

    A company just paid this year's dividend of $3.50 per share on its stock. The dividend is expected to grow at 28 percent per year for two years. Thereafter, the dividend will grow at 4.3 percent per year in perpetuity. If the appropriate discount rate is equal to 12 percent, what is the price of the company's stock today? A. $74 B. $61 C. $70 D. $67

  • 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?

  • 31. Phillips, Inc. just paid a dividend of $3.25 per share on its common stock (that...

    31. Phillips, Inc. just paid a dividend of $3.25 per share on its common stock (that is, Do = 3.25). Investors expect the dividend to grow at 45% in years 1 and 2, they expect the dividend to grow at 25% in year 3 and they expect that all future dividends (that is, dividends in years 4, 5, ..., infinity) to grow at a constant rate of 5% per year. If the cost of capital for Phillips, Inc. stock is...

  • XYZ currently has common stock trading at $40 per share. XYZ just paid a dividend of...

    XYZ currently has common stock trading at $40 per share. XYZ just paid a dividend of $2.00 per share, which is expected to grow at a constant rate of 5%. XYZ's beta is 1.5, the risk-free rate is 2%, and the market return is expected to be 8%. The pre-tax yield on XYZ's bonds is 7%. XYZ's finance department believes that new stock would require a premium of 5% over their own bond yield. Flotation cost for issuing new stock...

  • A company’s stock currently sells for $50 per share, currently pays a dividend of $2, has...

    A company’s stock currently sells for $50 per share, currently pays a dividend of $2, has a constant growth rate of 5%, and will incur flotation costs of 15% when it issues new common stock. What is the firm’s cost of new stock, re? 9.20% 9.94% 10.50% 11.75% 12.30%

  • The common stock for Greenland Financials currently sells for $45 per share. The firm's last dividend...

    The common stock for Greenland Financials currently sells for $45 per share. The firm's last dividend was $1.50, and its dividends are anticipated to grow at the rate 10% as they did over the past. Flotation costs for new shares will be $3.75 per share. Calculate the company's cost of a new common stock issue. Round your calculations to the nearest 0.01% 14%

  • XYZ currently has common stock trading at $40 per share. XYZ just paid a dividend of...

    XYZ currently has common stock trading at $40 per share. XYZ just paid a dividend of $2.00 per share, which is expected to grow at a constant rate of 5%. XYZ's beta is 1.5, the risk-free rate is 2%, and the market return is expected to be 8%.  The pre-tax yield on XYZ's bonds is 7%. XYZ's finance department believes that new stock would require a premium of 5% over their own bond yield.  Flotation cost for issuing new stock is 10%....

  • 1) A company just paid a dividend of $1.50 on its stock. The dividend is expected...

    1) A company just paid a dividend of $1.50 on its stock. The dividend is expected to grow at 4% forever. If the discount rate is 6%, what is the present value of the stock? Group of answer choices $80.97 $74.00 $79.38 $78.00 2) A stock is expected to pay a dividend of $3 next year. The dividend will grow at a rate of 5% for 2 years, and will then grow at a rate of 3% from that point...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT