What is the cost of new equity for this company

Reference no: EM13304291

A company expects to pay a dividend of $1.20 next year, dividends are expected to grow at 3%, and the company's shares are priced at $48 per share. Issuing new shares would involve flotation costs of 10.0%. What is the cost of new equity for this company, taking into account flotation costs?

Reference no: EM13304291

Questions Cloud

By what amount should lewelling''s paid-in capital-excess : 1.During its first year of operations, the McCollum Corporation entered into the following transactions relating to shareholders' equity. The corporation was authorized to issue 170 million common shares, $1 par per share.

In what sense is a reinvestment rate assumption embodied : In what sense is a reinvestment rate assumption embodied in the NPV, IRR, and MIRR methods?What is the assumed reinvestment rate of each method?

Amount of bond issue costs amortized each semiannual period : Assume that a company issues bonds with a $100,000 face value at 100 and must pay $5,000 of costs associated with the issuance. Assume that the life of the bond is five years and that the company amortizes bond issue costs on a straight-line b..

What four statements are contained in most annual reports : If a "typical" firm reports $20 million of retained earning on its balance sheet, could its directors declare a $20 million cash dividend without any qualms whatsoever?

What is the cost of new equity for this company : What is the cost of new equity for this company, taking into account flotation costs?

Keep records as to operating expenses : LO.2 In 2011, Emma purchased an automobile, which she uses for both business and personal purposes. Although Emma does not keep records as to operating expenses

What is the cost of new equity for this company\ : What is the cost of new equity for this company, taking into account flotation costs?

The principal amount of the lease obligation : On January 1, 2015, Day Corp. entered into a 10-year lease agreement with Ward, Inc. for industrial equipment. Annual lease payments of $10,000 are payable at the end of each year. Day knows that the lessor expects a 10 percent return on the l..

What is the amount of liability for coupons : Sasha Co. shipped 100,000 rebate coupons in products sold during 2005. The coupons are redeemable for $15 each. Each product is sold for $200 and has a cost of $100. Sasha anticipates that 70 percent of the rebate coupons will be redeemed. The..

User Account

All Pages