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The common shares of West Bay Co. paid a dividend of $2.10 per share last year. Investment analysts have indicated that the historical dividend growth
The common shares of West Bay Co. paid a dividend of $2.10 per share last year. Investment analysts have indicated that the historical dividend growth rate of 4% is expected to continue for the foreseeable future. They have also informed you that the risk-free rate of return is 3%, the market risk premium is 5% and the beta on common shares is 0.95. If flotation costs are 5% after tax and West Bay intends to raise additional common equity financing, calculate the component cost for West Bays common shares if its tax rate is 35%
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