(Cost of common equity) The common stock for the Bestsold Corporation sells for $57.43 a share....
(Cost of common equity) The common stock for the Bestsold Corporation sells for $57.43 a share. Last year the firm paid a $ 3.97dividend, which is expected to continue to grow 3.4 percent per year into the indefinite future. If Bestsold's tax rate is 34 percent, what is the firm's cost of common equity? (Round to two decimal places.)
Homework Answers
price = dividend next year/(Required return - growth rate)
=>
3.97 * (1+3.4%)/(Cost of equity - 3.4%) = 57.43
=>
cost of equity = 10.55%
Add Answer to:
(Cost of common equity) The common stock for
the Bestsold Corporation sells for $57.43 a share....
16.(Cost of Equity) The common stock for the Bestsold Corporation sells for Rs81. If a new...
16.(Cost of Equity) The common stock for the Bestsold Corporation sells for Rs81. If a new issue is sold, the flotation cost is estimated to be 7 percent. The company pays 45 percent of its earnings in dividends, and a Rs5 dividend was recently paid. Earnings per share five years ago were Rs10. Earnings are expected to continue to grow at the same annual rate in the future as during the past five years. The firm's marginal tax rate is...
COST OF COMMON EQUITY. A firm's common stock currently sells for $25 per share. The firm...
COST OF COMMON EQUITY. A firm's common stock currently sells for $25 per share. The firm recently paid a dividend of $2.40 per share on its common stock, and investors expect the dividend to grow indefinitely at a constant rate of 3 percent per year. Calculate the firm's cost of retained earnings using the DCF approach.
(Related to Checkpoint 14.2 and Checkpoint 14.3) (Cost of common equity) The common stock for...
(Related to Checkpoint 14.2 and Checkpoint 14.3) (Cost of common equity) The common stock for the Hetterbrand Corporation sells for $59.82, and the last dividend paid was $2.23. Five years ago the firm paid $1.93 per share, and dividends are expected to grow at the same annual rate in the future as they did over the past five years. a. What is the estimated cost of common equity to the firm using the dividend growth model? b. Hetterbrand's...
The common stock for the Hetterbrand Corporation sells for $59.67,and the last dividend paid was $2.27.Five...
The common stock for the Hetterbrand Corporation sells for $59.67,and the last dividend paid was $2.27.Five years ago the firm paid $1.89 per share, and dividends are expected to grow at the same annual rate in the future as they did over the past five years. a. What is the estimated cost of common equity to the firm using the dividend growth model? b. Hetterbrand's CFO has asked his financial analyst to estimate the firm's cost of common equity...
(Related to Checkpoint 14.2 and Checkpoint 14.3) (Cost of common equity) The common stock for the...
(Related to Checkpoint 14.2 and Checkpoint 14.3) (Cost of common equity) The common stock for the Hetterbrand Corporation sells for $60.09, and the last dividend paid was $2.21. Five years ago the firm paid $1.83 per share, and dividends are expected to grow at the same annual rate in the future as they did over the past five years. a. What is the estimated cost of common equity to the firm using the dividend growth model? b. Hetterbrand's CFO has...
The common stock for the Bestsold Corporation sells for $62. If a new issue is sold,...
The common stock for the Bestsold Corporation sells for $62. If a new issue is sold, the flotation costs are estimated to be 9 percent. The company pays 60 percent of its earnings in dividends, and a $3.60 dividend was recently paid. Earnings per share 5 years ago were $4.00. Earnings are expected to continue to grow at the same annual rate in the future as during the past 5 years. The firm's marginal tax rate is 32 percent. Calculate...
The common stock for the Hetterbrand Corporation sells for $59.14, and the last dividend paid was...
The common stock for the Hetterbrand Corporation sells for $59.14, and the last dividend paid was $2.28. Five years ago the firm paid $1.98 per share, and dividends are expected to grow at the same annual rate in the future as they did over the past five years. a. What is the estimated cost of common equity to the firm using the dividend growth model? b. Hetterbrand's CFO has asked his financial analyst to estimate the firm's cost of...
(Individual or component costs of capital) Compute the cost of capital for the firm for the...
(Individual or component costs of capital) Compute the cost of capital for the firm for the following: a. A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 11.2 percent. Interest payments are $56.00 and are paid semiannually. The bonds have a current market value of $1,125 and will mature in 10 years. The firm's marginal tax rate is 34 percet. b. A new common stock issue that paid a $1.84 dividend...
(Individual or component costs of capia Compute the cost of capital for the firm for the...
(Individual or component costs of capia Compute the cost of capital for the firm for the following a. A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 10.8 percent. Interest payments are $54.00 and are paid semiannually The bonds have a current market value of $1,125 and will mature in 10 years. The firm's marginal tax rate is 34 percet. b. Anew common stock issue that paid a $1.83 dividend last...
COST OF COMMON EQUITY The future earnings, dividends, and common stock price of Callahan Technologies Inc....
COST OF COMMON EQUITY The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 4% per year. Callahan's common stock currently sells for $29.50 per share; its last dividend was $1.50; and it will pay a $1.56 dividend at the end of the current year. Using the DCF approach, what is its cost of common equity? Round your answer to two decimal places. Do not round your intermediate calculations. If the firm's beta is...
16.(Cost of Equity) The common stock for the Bestsold Corporation sells for Rs81. If a new issue is sold, the flotation cost is estimated to be 7 percent. The company pays 45 percent of its earnings in dividends, and a Rs5 dividend was recently paid. Earnings per share five years ago were Rs10. Earnings are expected to continue to grow at the same annual rate in the future as during the past five years. The firm's marginal tax rate is...
(Related to Checkpoint 14.2 and Checkpoint 14.3) (Cost of common equity) The common stock for the Hetterbrand Corporation sells for $60.09, and the last dividend paid was $2.21. Five years ago the firm paid $1.83 per share, and dividends are expected to grow at the same annual rate in the future as they did over the past five years. a. What is the estimated cost of common equity to the firm using the dividend growth model? b. Hetterbrand's CFO has...
(Individual or component costs of capital) Compute the cost of capital for the firm for the following: a. A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 11.2 percent. Interest payments are $56.00 and are paid semiannually. The bonds have a current market value of $1,125 and will mature in 10 years. The firm's marginal tax rate is 34 percet. b. A new common stock issue that paid a $1.84 dividend...
(Individual or component costs of capia Compute the cost of capital for the firm for the following a. A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 10.8 percent. Interest payments are $54.00 and are paid semiannually The bonds have a current market value of $1,125 and will mature in 10 years. The firm's marginal tax rate is 34 percet. b. Anew common stock issue that paid a $1.83 dividend last...
Most questions answered within 3 hours.
-
A futuristic design for a car is to have a large solid
disk-shaped flywheel within the...
asked 5 minutes ago -
Discuss how Entrepreneurial leadership style differs
from traditional leadership?
asked 7 minutes ago -
Solid NaOH is added to a solution of 0.50 M acetic acid until
the pH of...
asked 9 minutes ago -
Which of the following statements is not a characteristic of the
Internal Revenue Code?
A) The...
asked 16 minutes ago -
Say true or false and explain it.
A heap is represented using an array. The array...
asked 26 minutes ago -
Explain how the DNA replication enzyme complex is organized and
functions, please don't copy paste from...
asked 26 minutes ago -
how
can personality contribute to one scoring high on the need to
evaluate measurement by Jarvis?
asked 27 minutes ago -
A high jumper is attempting to jump over a crossbar that is
placed at a height...
asked 31 minutes ago -
1.
A hemophiliac male mates with a healthy female. what are the
possible genotypes for the...
asked 49 minutes ago -
You could argue that even though Rockefeller clearly had
enormous market power (90% of the market)...
asked 1 hour ago -
At the beginning of the year, Palermo Brothers, Inc., purchased
a new plastic water bottle making...
asked 1 hour ago -
Calculate the change in the Gibbs energy of the system for the
following processes: a) 6.0...
asked 53 minutes ago