Cost of common equity financing using gordon model

Assignment Help Financial Management

Reference no: EM131354034

Last year the Black Water Inc. paid dividends $4.32. Company’s dividends are expected to grow at an annual rate of 5% forever. The company’s common stock is currently selling on the market for $72.58. The investments banker will charge flotation costs $2.12 per share. Calculate the cost of common equity financing using Gordon Model. Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box).

Reference no: EM131354034

Questions Cloud

The shares of debt and equity in capital structure : (Cost of capital) The company has currently 20 000 shares outstanding. The book value per share is $15. The stock is currently trading at the P/B ratio of 2.0; P/E= 12 and EV/EBITDA=7.5. Find Cost of debt and equity, The shares of debt and equity in ..

What weight should you use for debt in computation : FarCry Industries, a maker of telecommunications equipment, has 3 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, and 10,000 bonds. Suppose the common shares are selling for $24 per share, the preferred sh..

Compute correct forward rate implied by interest rates : The current level of real estate prices in Moscow seem to be on a reasonable level now and you consider that this is just the right time to step into the market. Try to show with calculations, which option has the lowest present value cost for you in..

Cost of common equity financing using gordon model : Last year the Black Water Inc. paid dividends $4.32. Company’s dividends are expected to grow at an annual rate of 5% forever. The company’s common stock is currently selling on the market for $72.58. The investments banker will charge flotation cost..

Adopt a global standardization strategy : In this age of globalization, some gurus argue that all industries are becoming global and that all firms need to adopt a global standardization strategy. Do you agree? Why or why not?

Computing the net present value of the project : Rossiter restaurants is analyzing a project that requires 180,000 of fixed assets. when the period ends, those assets are expected to have an after tax salvage value of 45,000, how is the 45,000 salvage value handled when computing the net present va..

What was dollar return and percent return : A corporate bond that you own at the beginning of the year is worth $890. During the year, it pays $48 in interest payments and ends the year valued at $880. What was your dollar return and percent return?

European call option-price of call option described : Right now, the Chicago Board Options Exchange website shows that there is a European call option on Ford Motor Company stock that matures in exactly 120 days. The option has an exercise price of $25. Using the Black-Scholes formula, calculate the pri..

User Account

All Pages