Q15

Q16

Question 15 1 pts A company just paid a $3.5 per share dividend on its common stock (DO = $3.5). The dividend is expected to grow at a constant rate of 1 percent per year. The stock currently sells for $41 a share. If the company issues additional stock, it must pay its investment banker a flotation cost of $1 per share. What is the cost of external equity, re? O 9.62% O 10.02% O 10.24% O 9.84% O 10.42% Question 16 1 p Which of the following is NOT a disadvantage of the payback period? a o It does not consider cash flows beyond the payback period. It is completely useless as a risk and liquidity indicator. There is no clear decision rule. O All of these are disadvantages of the payback period. It does not take into account the time value of money