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Question 35 What is the cost of new equity capital for a firm if the current stock price is $50.00, the firm just paid a
| Question 35 | |||||||||
| What is the cost of new equity capital for a firm if the current stock price is $50.00, the firm just paid a | |||||||||
| $4.00 dividend and dividends are supposed to grow at 5%. The underwriters expected a $3.00/share | |||||||||
| underpricing and flotation costs of $4.00/Share | |||||||||
| rn = D1 / Nn + g | where Nn = current stock price - flotation costs / share - underpricing/share | ||||||||
| A. 6.56% | |||||||||
| B. 10.45% | |||||||||
| C. 13.75% | |||||||||
| D. 14.77% | |||||||||
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Information Quality Assurance And Internal Control For Management Decision Making
Authors: William R Kinney
1st Edition
0256221618, 9780256221619
