Question
Reported earnings available to common stock= 4,600000 last year...For those earning company paid dividend of 1.16$ on each of its 1,000,000 common shares outstanding. Capital
Reported earnings available to common stock= 4,600000 last year...For those earning company paid dividend of 1.16$ on each of its 1,000,000 common shares outstanding. Capital structure company includes 40% debt, 20% preferred stock, and 40% common stock. It is taxed at a rate of 30% a))market price of comon stock is 31$ and dividends are expected to grow at rate of 8% per year what is the companys cost of retained earnings financing? b)if underpricing and flotation costs on new shares of common stock amount to 6$ per share. what is the comapnys cost of new common stock financing? c)The comapny can issue 2.43 dividend preferred stock for a market price of 29$ per share. Flotation costs would amount to 6$ per share. What is the cost of preferred stock financing? d)The company can issue 1,000-par-value,7% coupon, 7-year bonds that can be sold for 1,170$ each. Flotation costs would amount to 20$ per bond. use the estimation formula to figure the approximate after-tax cost of debt financing. e) what is the WACC?
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