What is the cost of external common? equity

Assignment Help Financial Management

Reference no: EM131445419

?(Individual or component costs of capital?) Compute the cost of the? following:

b. A new common stock issue that paid a ?$1.50 dividend last year. The par value of the stock is? $15, and earnings per share have grown at a rate of 7 percent per year. This growth rate is expected to continue into the foreseeable future. The company maintains a constant? dividend-earnings ratio of 30 percent. The price of this stock is now ?$26 ?, but 5 percent flotation costs are anticipated. What is the cost of external common? equity?________%

c. Internal common equity when the current market price of the common stock is ?$48 . The expected dividend this coming year should be ?$3.50 ?, increasing thereafter at an annual growth rate of 7 percent. The? corporation's tax rate is 38 percent. What is the cost of internal common? equity? ________%

d. A preferred stock paying a dividend of 12 percent on a ?$110 par value. If a new issue is? offered, flotation costs will be 14 percent of the current price of ?$174 . What is the cost of capital for the preferred? stock?_________%

e. A bond selling to yield 8 percent after flotation? costs, but before adjusting for the marginal corporate tax rate of 38 percent. In other? words, 8 percent is the rate that equates the net proceeds from the bond with the present value of the future cash flows? (principal and? interest). What is the? after-tax cost of debt on the? bond? ________%

Reference no: EM131445419

Questions Cloud

Can the self-defense analogy justify abortion : Do you think the fetus has human or moral status? Does your answer here affect the moral acceptability of abortion? Can the self-defense analogy justify abortion, if the fetus were a person

Define a root cause analysis : Define a root cause analysis and when it is used. In the case study identify the incident and explain the problem that might trigger a root cause analysis.

Write an introduction with a thesis : Select four specific events or developments that span the years covered by this course, based on their impact on the topic. Two of the events must be from before 1945 and two events must be from after 1945. You must assess how the events in relati..

What is the game matrix : Each of two players must choose a number between 1 and 5. If a player's choice = opposing player's choice +1, she loses $2; if a player's choice ≥ opposing player's choice +2, she wins $1. If both players choose the same number the game is a draw.

What is the cost of external common? equity : A new common stock issue that paid a ?$1.50 dividend last year. The par value of the stock is? $15, and earnings per share have grown at a rate of 7 percent per year. This growth rate is expected to continue into the foreseeable future. The company m..

Annual coupon bond with a current yield to maturity : What is the intrinsic value of a $10,000 , 8% annual coupon bond with a current yield to maturity of 7.2% and which will mature in 10 years if the coupon payments are made semi-annually?

What is the mean milk production per milk cow in california : What is the mean milk production per milk cow in California? What is the standard deviation of the milk production per milk cow in California? Why should you use the mean and standard deviation to analyze this data?

Find the game matrix : Each player displays either one or two fingers and simultaneously guesses how many fingers the opposing player will show. If both players guess either correctly or incorrectly, the game is a draw.

Why does a centralized government become less centralized : How does a central government come to exert control over the resources within its territory? Why does a centralized government become less centralized? Or, why does a government fail to centralize in the first place? Consider at least two regions ..

User Account

All Pages