Question
1. The company has 10,000 ordinary shares with a market value of P25 each. It paid a P1.8 dividend per share last year. Dividends are
1. The company has 10,000 ordinary shares with a market value of P25 each. It paid a P1.8 dividend per share last year. Dividends are expected to grow at a constant rate of 8%. If flotation costs are 5% of the selling price, what is the cost of new equity financing?
a. 8.19% b. 15.78% c. 15.58% d. 16.19%
2. The Treasury bill rate at the time of estimation is 15% with a beta of 2.0 and the expected return on the market is 20%. What is the firm's required rate of return?
a. 20% b. 25% c. 30% d. 15%
3. An individual borrows150,000 from a bank at 10% annually compounded interest to be repaid in 6 equal installments. Calculate the principal paid in second year. (Round off the final answer to the nearest peso.Example of writing your answer95,565)
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