Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please help me correct the answers Jarett & Sons's common stock currently trades at $26.00 a share. It is expected to pay an annual dividend
please help me correct the answers
Jarett & Sons's common stock currently trades at $26.00 a share. It is expected to pay an annual dividend of $2.00 a share at the end of the year (D1 = $2.00), and the constant growth rate is 3% a year. a. What is the company's cost of common equity if all of its equity comes from retained earnings? Do not round intermediate calculations. Round your answer to two decimal places. 10.69 % b. If the company issued new stock, it would incur a 13% flotation cost. What would be the cost of equity from new stock? Do not round intermediate calculations. Round your answer to two decimal places. 11.55 % The Evanec Company's next expected dividend, D1, is $3.48; its growth rate is 5%; and its common stock now sells for $30.00. New stock (external equity) can be sold to net $27.00 per share. a. What is Evanec's cost of retained earnings, rs? Do not round intermediate calculations. Round your answer to two decimal places. rs = 16.6 % b. What is Evanec's percentage flotation cost, F? Round your answer to two decimal places. F = 10 % c. What is Evanec's cost of new common stock, re? Do not round intermediate calculations. Round your answer to two decimal places. re = 16.6 %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