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Cost of Common Equity with Flotation
Banyan Co.’s common stock currently sells for $52.25 per share. The growth rate is a constant 10.8%, and the company has an expected dividend yield of 2%. The expected long-run dividend payout ratio is 40%, and the expected return on equity (ROE) is 18%. 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.
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If the required rate of return is 17.0 percent, what is the current value of the stock?
Axon Industries needs to raise $2500000 USDs for a new investment project. If the firm issues 1-year debt, it may have to pay an interest rate of 6%, although Axon's managers believe that 4% would be a fair rate given the level of risk. What is the ..
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On November 1, 1999, the exchange rate between the Brazilian real and U.S. dollar is R$1.95/$. What would you forecast exchange rate to be at around November.
A company pays a constant $20 dividend on its stock. The company will maintain this dividend for the next 15 years and will then cease paying dividends forever. What is the current price per share if the required return on this stock is 11 percent? S..
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