What is the cost of new common equity capital

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Reference no: EM131351665

1. The current dividend for a corporation is $3.73. The dividend is expected to increase by 12%. and it is expected to continue that rate of growth for the foreseeable future. Given their stock is trading at $38 per share and it cost $3.37 per share to issue new common stock, what is the cost of new common equity capital?

A 10.99%

B. 22.77%

C. 24.06%

D. 10.77%

2. A firm issued $10 million in preferred stock at a price of $60.35 per share. The preferred shares carry an 11% dividend. The firm pays $2.87 per share in flotation costs per share. What is the cost of capital for this issuance of preferred stock?

A. 11.54%

B. 2.31%

C. 43.23%

D. 16.01%

Reference no: EM131351665

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