Compute cost of retained earnings

Assignment Help Financial Management

Reference no: EM131549417

Murray Motor Company wants you to calculate its cost of common stock. During the next 12 months, the company expects to pay dividends (D1) of $1.50 per share, and the current price of its common stock is $30 per share. The expected growth rate is 6 percent.

a. Compute the cost of retained earnings (Ke). (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Cost of retained earnings %

b. If a $2 flotation cost is involved, compute the cost of new common stock (Kn). (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Cost of new common stock %

Reference no: EM131549417

Questions Cloud

What is the venture capital market : What is the Venture Capital market? Why can this market be important to private businesses?

Whose security interest has priority : A's Shoe, Inc. (A's), borrows $8,000 each from B Loan Corporation (BLC), On March 20, A's defaults on all of the loans. Whose security interest has priority?

You make the last of your thirty investments : how much will you have on the day that you make the last of your thirty investments?

Current price of bonds if the present yield to maturity : Compute the current price of the bonds if the present yield to maturity is.

Compute cost of retained earnings : Compute the cost of retained earnings (Ke). If a $2 flotation cost is involved, compute the cost of new common stock (Kn).

Your first withdrawal is at the end of your first retirement : How much will you have to save each year over next 40 years to meet your goal? assume that your first withdrawal is at the end of your first retirement year.

Interest coverage ratio : If the company has an interest expense of $2 billion, its interest coverage ratio is?

New machine and piece of equipment : Compute the weighted average cost of capital. Which project(s) should be accepted? New machine-Piece of equipment.

Telecom systems can issue debt yielding : Telecom Systems can issue debt yielding 6 percent. The company is in a 35 percent bracket. What is its aftertax cost of debt?

User Account

All Pages