Cost of retained earnings common equity, Finance Basics

Clemson Software is considering a new project whose data are shown below. The required equipment has a 3-year tax life, after which it will be worthless, and it will be depreciated by the straight-line method over 3 years. Revenues and other operating  costs are expected to be constant over the project's 3-year life. What is the project's Year 1 cash flow?

Equipment cost (depreciable basis) $65,000
Straight-line depreciation rate 33.333%
Sales revenues, each year $60,000
Operating costs (excl. deprec.) $25,000
Tax rate 35.0%

Year 1 Cash Flows = ____________________.

3b. Weaver Chocolate Co. expects to earn $3.50 per share during the current year, its expected dividend payout ratio is 65%, its expected constant dividend growth rate is 6.0%, and its common stock currently sells for $32.50 per share. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of retained earnings common equity (rs) for Weaver Chocolate Co.? What would be the cost of equity from new common stock (re)?

Cost of Retained Earnings Common Equity (rs) = ____________________.

Cost of Newly Issued Common Stock (re) = ____________________.

Posted Date: 4/1/2013 3:37:24 AM | Location : United States







Related Discussions:- Cost of retained earnings common equity, Assignment Help, Ask Question on Cost of retained earnings common equity, Get Answer, Expert's Help, Cost of retained earnings common equity Discussions

Write discussion on Cost of retained earnings common equity
Your posts are moderated
Related Questions
What are the main functions of the financial systems? The main functions of financial systems in short are as follows: a. Give the mechanisms by that funds can be transferre

Maghrabi Enclosure follows a moderate current asset investment policy, but it is considering whether to shift to a different strategy. The firm''s annual sales are $500,000; its f

If the winner’s prize increases at the same rate (8.43%), what will it be in 2041?

Example of Capital Asset Pricing Model KK Ltd is an all equity firm whose Beta factor is 1.2, the interest rate on T. bills is currently at 8.5% and the market rate of return


Significance of Investment Decisions a) Such type of decisions is importance since they will influence the company's size or like fixed assets, retained and sales earnings.

How would you explain the value of financial planning to friends or family? Which topics will you discuss with children in your life? Which topics do you feel are most imp

Why are financial institutions heavily regulated, with specific focus on their ability to increase or reduce the money supply?

Company XYZ stock is considering the two new projects, Project A and Project B. The two projects have similar risk characteristics as the existing business. The managers forecast t

Overlaps and Conflicts Overlaps - whenever attaining ONE MEANS achieving the another Conflicts - whenever attaining ONE CANNOT permit the achievement of another.