Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Banyan Co.'s common stock currently sells for $52.75 per share. The growth rate is a constant 7%, and the company has an expected dividend
Banyan Co.'s common stock currently sells for $52.75 per share. The growth rate is a constant 7%, and the company has an expected dividend yield of 3%. The expected long-run dividend payout ratio is 30%, and the expected return on equity (ROE) is 10.0%. New stock can be sold to the public at the current price, but a flotation cost of 15% would be incurred. What would be the cost of new equity? Do not round intermediate calculations. Round your answer to two decimal places. 10.89 %
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started