What would be the cost of new equity

Assignment Help Financial Management

Reference no: EM131518757

Cost of Common Equity with Flotation Banyan Co.’s common stock currently sells for $47.50 per share. The growth rate is a constant 10.4%, and the company has an expected dividend yield of 5%. The expected long-run dividend payout ratio is 35%, and the expected return on equity (ROE) is 16%. 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 new equity? Round your answer to two decimal places. Do not round your intermediate calculations

Reference no: EM131518757

Questions Cloud

Calculate economic value added assuming its cost of capital : Calculate the economic value added assuming its cost of capital is 10%.

Calculate the npv of the project : Neon Corporation’s stock returns have a covariance with the market portfolio of .0455. Calculate the NPV of the project.

What are theterritories and what are the states : What is the risk assessment for opening a business in Costa Rica? How is the political system structured? What are theTerritories? What are the States?

The cost of capital-weighted average cost of capital : The firm's target capital structure is the mix of debt, preferred stock, and common equity the firm plans to raise funds for its future projects.

What would be the cost of new equity : Cost of Common Equity with Flotation Banyan Co.’s common stock currently sells for $47.50 per share. What would be the cost of new equity?

Permanent endownment wants to deposit money each year : A philanthropist working to set up a permanent endownment wants to deposit money each year,

What is its cost of common equity and its WACC : The last dividend was D0 = $2.50, and it is expected to grow at a 7% constant rate. What is its cost of common equity and its WACC?

What is WACC for last dollar raised to complete expansion : What is the WACC for the last dollar raised to complete the expansion?

Government intervention in the foreign exchange markets : Identify an example of recent government intervention (2007 and after) in the foreign exchange markets and discuss its rationale.

User Account

All Pages