Question
What is the cost of new equity assuming the firm's stock price is currently selling for $10 and will pay a dividend of $2 next
What is the cost of new equity assuming the firm's stock price is currently selling for $10 and will pay a dividend of $2 next year. The firm expects constant growth of 2.72% and floatation costs associated with the new equity issue of 20%. Write your answer as a decimal.
Compute the required rate of return on a firm that has a Beta of 0.9. Assume the expected market return is 12% and the risk free security returns 4%. Write the answer as a decimal.
Compute the Weighted average cost of capital (WACC) assuming the firms cost of debt is 7% and the firms cost of equity is 10.3%. Assume the firm is equally financed by both debt and equity and the tax rate is zero. Write the answer as a decimal.
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