Question
1)Tobins Toys has decided to expand by opening 20 new stores. Their stock is selling for $20 and is what Tobins Toys plans to offer
1)Tobins Toys has decided to expand by opening 20 new stores. Their stock is selling for $20 and is what Tobins Toys plans to offer the new stocks for, but will have to pay $1 in flotation costs. Yesterday Tobins Toys paid a dividend of $0.50. Tobins Toys has continuously guaranteed their dividend will grow by 2.5% a year. What must be Tobins cost of common stock?
2)Stobins Toys has decided to expand by opening 25 new stores. Yesterday Stobins Toys paid a dividend of $1.25. Stobins Toys earned $75 after flotation costs. If Stobins cost of issuing these shares was 15% what is the growth rate assumed using the Dividend Growth Model?
3)PBJ is expanding is production. The expansion will be financed by issuing new 25-year, $1,000 par, 10.25% annual coupon bonds paid semiannually. The market price of each bond is $975. Flotation expense on the new bonds will be $30 per bond. PBJs marginal tax rate is 38%. What is the after-tax cost of debt for the newly-issued bonds?
Could someone help with those questions please!
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