Calculate the cost of common equity financing

Assignment Help Finance Basics
Reference no: EM132502707

Last year the Black Water Inc. paid dividends $4.82. Company's dividends are expected to grow at an annual rate of 2% forever. The company's common stock is currently selling on the market for $75.20. The investments banker will charge flotation costs $2.63 per share. Calculate the cost of common equity financing using Gordon Model.

Round the answers to two decimal places in percentage form.

Reference no: EM132502707

Questions Cloud

What is markman price-earnings ratio : Ronny is considering investing in Markman, Inc. The current price of Markman is $40 a share, the after-tax earnings are $21,600,000, and there are 10,000
Determine which is not a benefit of decentralization : Which is NOT a benefit of decentralization? Simplifies the coordination of decision-making across the company, Trains future managers in decision-making
Staff accountant at nashville sports connection : You are the staff accountant at Nashville Sports Connection. Your supervisor has asked you to create table giving the details of memberships and revenue
Which component of the balanced scorecard do the trends fall : Warranty repairs in the new homes it builds. It also has very low employee turnover. Under which component of the balanced scorecard do these trends fall?
Calculate the cost of common equity financing : Last year the Black Water Inc. paid dividends $4.82. Company's dividends are expected to grow at an annual rate of 2% forever.
How much is the cost gap that needs to be removed to meet : If the product's current cost is $3.38 per unit, how much is the cost gap that needs to be removed to meet the target profit margin?
Determine which terms is best associated with the idea : Beach by working backward from the value that city managers desire to gain from the project. Which of the following terms is best associated with this idea
MBA401 Reflective Writing Assignment : MBA401 Reflective Writing Assignment - Kaplan Business School, Australia. Task - Reflective Journal - Writing a reflective Journal
Find the allowable unit cost of the product is : Applying the target costing model, the allowable unit cost of the product is? Cann Un Company manufactures scientific calculator. The product life of calculator

Reviews

Write a Review

Finance Basics Questions & Answers

  A company is considering a new inventory system that will

a company is considering a new inventory system that will cost 120000. the system is expected to generate positive cash

  Why an informal settlement may be preferable to declaring

Explain why an informal settlement may be preferable to declaring bankruptcy for both the failing firm and its creditors.

  How much is annual cash flow associated with the perpetuity

A perpetuity with the first annual cash flow paid at the beginning of year 5 is equivalent to receiving $109,000 in 18 years' time. Assume that the perpetuity and the lump sum are of equivalent risk and that j12 = 14.32% pa is the appropriate interes..

  What should be the stated rate on the loans

Big Bank Corp. wants to earn an effective interest rate of 9% (EAR) on its consumer loans. It uses monthly compounding on consumer loans.

  What is the value of the stock in nonconstant growth

Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends.

  Potential investors investment strategy

Determine the profile of the investor for which this company may be a fit, relative to that potential investor's investment strategy. Provide support for your rationale.

  What is the company free cash flow for the fiscal year

A company paid out $1,000,000 in dividends to shareholders in the most recent fiscal year while also increasing the retained earnings by $2,000,000.

  What is the beta of this project

The firm owns this money. The market portfolio generates the payoff (200, 250, 300) and has an expected return of 8%. The risk free rate is 3%. Suppose CAPM holds.

  Discuss the importance of quality in a firm

Discuss the importance of quality in a firm's financial statements and how you would go about evaluating the quality of a firm's financial statement.

  Uniform pricing rule than the discriminatory pricing rule

Why are limit orders more aggressively priced under the uniform pricing rule than the discriminatory pricing rule? Which pricing rule is more preferable ?

  What is the value of forward contract

This stock pays dividend payment of $3 each in 3 months and 6 months, respectively. What is the value of this forward contract?

  Recommendations for the content of cross-cultural training

UBER Recommendations for the content of cross-cultural training for the host and home country employees who will be on assignment in the host country

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd