Question
Assist with step-by-step calculations. Thank you Cost of common stock equityRoss Textiles wishes to measure its cost of common stock equity.The firm's stock is currently
Assist with step-by-step calculations. Thank you
Cost of common stock equityRoss Textiles wishes to measure its cost of common stock equity.The firm's stock is currently selling for $67.38. The firm just recently paid a dividend of $3.99. The firm has been increasing dividends regularly.Five years ago, the dividend was just $3.04.
After underpricing and floatation costs, the firm expects to net $62.66 per share on a new issue.
a.Determine average annual dividend growth rate over the past 5 years. Using that growth rate, what dividend would you expect the company to pay next year?
b.Determine the net proceeds, Nn that the firm will actually receive.
c.Using the constant-growth valuation model, determine the cost of new common stock, rn.
d.Using the constant-growth valuation model, determine the cost of new common stock, rn.
a.The average annual dividend growth rate over the past 5 years is ______%.(Round to two decimal places.)
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