Question
Overland paid a dividend of $3 last year and its stock is selling at $75 per share. A constant growth rate of 5% is expected.
Overland paid a dividend of $3 last year and its stock is selling at $75 per share. A constant growth rate of 5% is expected. Overland's flotation costs for a new issue are 10% and the marginal tax rate is 40%. Calculate the cost of retained earnings.
| a. | 8.3% | |
| b. | 11.6% | |
| c. | 8.7% | |
| d. | 9.2% |
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The Oxford Guide To Financial Modeling
Authors: Thomas S Y Ho, Sang Bin Lee
1st Edition
019516962X, 9780195169621
