ZuoTi.Pro
Question

B А 1 Next Dividend (D.) 2 Dividend Growth Rate 3 Stock Price 4 Flotation Cost 5 Beta 6 Risk-free Rate 7 Expected Market Retu
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Using DDM Model,

Share price = D1 / (r-g)

B3 = B1 / (r - B2)

r = B1/B3 + B2 Answer

Last option is correct.

Please let me know in case you have any queries and I will be happy to assist you.

0 0
Add a comment
Know the answer?
Add Answer to:
B А 1 Next Dividend (D.) 2 Dividend Growth Rate 3 Stock Price 4 Flotation Cost...
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

  • Please help me answer questions 3,4 & 5. 2. What is the correct value for the...

    Please help me answer questions 3,4 & 5. 2. What is the correct value for the after- tax salvage cash flow in B4? a-2,800 b) 47,800 c) 27,000 d) 42,200 e) 45,000 1 Salvage Value 2 Book Value 3 Tax Rate 4 After-Tax Salvage Value 45,000 52,000 40% 40%(81-82) = 2850s → ស 3. What is the value of cell B7? a) 1.80 b) 2.17 c) 2.32 d) 2.50 e) 2.73 Year Cash Flows (60,000) 20,000 25,000 30,000 6 WACC...

  • 1. part 2 Part 3 File Home Insert Page Layout Formulas Data Rei Arial 12 A...

    1. part 2 Part 3 File Home Insert Page Layout Formulas Data Rei Arial 12 A A X Cut LECopy Format Painter Paste BIU. A 1.1.1 Clipboard Г Font : с A Year B Cash Inflows (Outflows) 1 1 2 0 3 4 2 5 3 6 4 7 5 8 9 Annual discount rate 10 Net present value 11 Internal rate of return ($200,000) $40,000 $80,000 $38,000 $50,000 $58,000 8.00% $12,015.09 10.23% Applying Excel 8: Calculating internal rate of...

  • A company is planning to issue new common stock. The expected dividend next year is $2.50,...

    A company is planning to issue new common stock. The expected dividend next year is $2.50, and the expected sales price is $35.00. The company's earnings are expected to grow at a constant rate for the foreseeable future. The return on S&P 500 is 8%, and the U.S. Treasury is traded at 3%. The flotation cost of issuing new common stock is 7%. If the company's stock has a beta of 1.55, what is the cost of common equity? 10.00%...

  • If the expected dividend growth rate is zero, then the cost of external equity capital raised...

    If the expected dividend growth rate is zero, then the cost of external equity capital raised by issuing new common stock (r e) is equal to the cost of equity capital from retaining earnings (r s) divided by one minus the percentage flotation cost required to sell the new stock, (1 − F). If the expected growth rate is not zero, then the cost of external equity must be found using a different formula. True False

  • The Evanec Company's next expected dividend, D1, is $2.91; its growth rate is 6%; and its...

    The Evanec Company's next expected dividend, D1, is $2.91; its growth rate is 6%; and its common stock now sells for $35.00. New stock (external equity) can be sold to net $31.50 per share. a. What is Evanec's cost of retained earnings, rs? Do not round intermediate calculations. Round your answer to two decimal places. Is = % b. What is Evanec's percentage flotation cost, F? Round your answer to two decimal places. F= % c. What is Evanec's cost...

  • Evanec Company's next expected dividend, D, is $3.20, its growth rate is 4% and its common...

    Evanec Company's next expected dividend, D, is $3.20, its growth rate is 4% and its common stock new sells for $32,00. New stock (external equity) can be sold to net $27.20 per share. What is Evanec's cost of retained earnings 1. Do not round intermediate cakculations. Round your answer to two decimal places. What is Evanec's percentage flotation cost, F? Round your answer to two decimal places. F What is Evanec's cost of new common stock, 7? Do not round...

  • 1. Expected cash dividends are $2.50, the dividend yield is 7%, flotation costs are 5%, and...

    1. Expected cash dividends are $2.50, the dividend yield is 7%, flotation costs are 5%, and the growth rate is 3%. Compute the cost of new common stock. A. 10.37% B. 8.89% C. 9.48% D. 9.34% 2. Debreu Beverages has an optimal capital structure that is 50% common equity, 40% debt, and 10% preferred stock. Debreu's pretax cost of equity is 12%. Its pretax cost of preferred stock is 7%, and its pretax cost of debt is also 7%. If...

  • in an excel format, can you please solve the following! thanks! Calculate the weighted Average Cost...

    in an excel format, can you please solve the following! thanks! Calculate the weighted Average Cost of Capital Given Rate Below (60 points) Show Work Cost of Capital Weighted Average Bonds Preferred Stock Internal Equity Common Stock % of Equity 25.00% 10.00% 10.00% 55.00% Remember Flotation Costs and Taxes Par Value Market Price Flotation Costs Coupon Rate Maturity $1.001.00 $1.100.00 S100.00 X% 10 years Tax Rate 30.01% Preferred Stock Remember Flotation Costs Dividend Selling Price Flotation Costs $6.00 S85 0...

  • Problem 10-4 Cost of Equity with and without Flotation Jarett & Sons's common stock currently trades...

    Problem 10-4 Cost of Equity with and without Flotation Jarett & Sons's common stock currently trades at $20.00 a share. It is expected to pay an annual dividend of $3.00 a share at the end of the year (D: - $3.00), and the constant growth rate is 8% a year. What is the company's cost of common equity if all of its equity comes from retained earnings? Round your answer to two decimal places. Do not round your intermediate calculations....

  • The Evanec Company's next expected dividend, D1, is $2.92; its growth rate is 4%; and its...

    The Evanec Company's next expected dividend, D1, is $2.92; its growth rate is 4%; and its common stock now sells for $37.00. New stock (external equity) can be sold to net $33.30 per share. What is Evanec's cost of retained earnings, rs? Do not round intermediate calculations. Round your answer to two decimal places. rs =   % What is Evanec's percentage flotation cost, F? Round your answer to two decimal places. F =   % What is Evanec's cost of new common stock,...

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
Active Questions
ADVERTISEMENT