Reference no: EM133115422
1) Kellogg's common stock is trading at $45.57, and its dividends are expected to grow at a constant rate of 6%. The company paid a dividend last year of $2.27.
If the company issues stock, they will have to pay a floatation cost per share equal to 5% of selling price.
a) Calculate the expected dividend in current year.
b) Cost of existing common stock (k cs) is ______%
c) The floatation cost is $________
d) Cost of common stock for new issuance is _______%
2) Ipos Berhad common stock is currently selling for RM4.56 each. Previously, the company paid dividend of RM0.23, the constant growth rate is 5%. Determine the cost of the common stock.
3) Stan is expanding his business and will sell common stock for the needed funds. If the current risk-free rate is 4% and the expected market return is 12%, what is the cost of equity for Stan if the beta of the stock is: ____________%
a) Beta = 0.75
b) Beta = 1.05