What is the firm after-flotation cost of common stock

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Reference no: EM131308228

1. Suppose that a firm has common stock that currently trades for $54.65 in the marketplace, paid an annual dividend last year of $3.25, and has flotation costs of 13.13%. Also, the firm in question had this year $105 million in EBIT, $25 million in interest expenses, $25 million in tax liability, and $25 in dividends that it paid to common shareholders. If the firm's return-on-equity is 12% what is the firm's after-flotation cost of common stock?

a. 11.48 %

b. 13.92 %

c. 14.32 %

d. 14.47 %

2. The Carter Company's bonds mature in 15 years have a par value of $1,000 and an annual coupon payment of $100. The market interest rate for the bonds is 9%. What is the price of these bonds?

A. 3642.48

B. 1080.61

C. 4448.55

D. 806.07

E. 274.54

Reference no: EM131308228

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