Question
1- Consider the issuance of preferred shares with an annual dividend of $ 12.00 per preferred share. These shares will sell for $ 100 each.
1- Consider the issuance of preferred shares with an annual dividend of $ 12.00 per preferred share. These shares will sell for $ 100 each. The cost of issuance (flotation cost) is $ 8 per share. Calculate the cost of preferred capital. You will have to show the counts. 2- The DupT corporation plans to issue common shares to finance its next capital investment project. The market price of the corporation's stock is $ 75 per share. A dividend of $ 5 per share is expected to be paid at the end of the year. The corporation has had an average annual growth of 6%. The issue cost is $ 2.50 per share. Determine the cost of equity capital using Gordon's constant growth method (Gordon Growth Model). You will have to show the counts.
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