Question
Boeing Co. (BA) is considering a one-year project that requires an initial investment of $500,000; however, in raising this capital, Boeing will incur an additional
Boeing Co. (BA) is considering a one-year project that requires an initial investment of $500,000; however, in raising this capital, Boeing will incur an additional flotation cost of 2%. At the end of the year, the project is expected to produce a cash inflow of $750,000.
5. What is the rate of return that Boeing Co. expects to earn on the project after its flotation costs are taken into account? Round answer to two decimals.
6. Boeing Co. has a current stock price of $24.50 and is expected to pay a dividend of $1.70 at the end of next year. The companys growth rate is expected to remain constant at 7%. If the issue's flotation costs are expected to equal 1.60% of the funds raised, what is the flotation-cost-adjusted cost of the firm's new common stock? Round answer to two decimals.
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