Question
i. The firm has a beta of 1.2. Market return equals 14% and a risk-free rate of return is 6%. Determine IPLs cost of common
i. The firm has a beta of 1.2. Market return equals 14% and a risk-free rate of return is 6%. Determine IPLs cost of common equity.
ii. If the companys capital structure is modified to 30% debt, 25% preferred stock and 45% common stock, what is its new WACC?
iii. Industrial Production Limited is expected to pay a year-end dividend of $2.50 per share and its flotation cost is 5%. Investors have projected a growth rate of 12% per annum. What is the cost of retained earnings, using the discounted cash flow approach?
iv. Calculate the cost of issuing new common stock.
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