Question
A company has a capital structure of 50% equity and 50% debt. It just paid out a dividend of $2.28 per share, and the company
A company has a capital structure of 50% equity and 50% debt. It just paid out a dividend of $2.28 per share, and the company has $2 million of retained earnings. The dividends are expected to grow at 4.7% per year in perpetuity. Shares are currently 26.4, and the underwriter will charge the issuing expense of 4.4% on the existing share market value. The tax rate is 40.2%.
What is the cost of retained earnings?
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Financial Reporting Financial Statement Analysis And Valuation A Strategic Perspective
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
9th Edition
1337614689, 1337614688, 9781337668262, 978-1337614689
