Equity used is from new stock with flotation cost

Assignment Help Financial Management

Reference no: EM132065141

System Inc. is expected to pay a $1.50 dividend at year end, the dividend is expected to grow at a constant rate of 6% a year, and the common stock currently sells for $75 a share. The yield on company’s bond is 7.00% and the tax rate is 35%. The target capital structure consists of 25% debt and the rest is common equity. What is the company’s WACC if all the equity used is from new stock with flotation cost of 2%?

Reference no: EM132065141

Questions Cloud

Difference between diversifiable risk and market risk : What is difference between diversifiable risk and market risk? Give real world examples.

Mortgage finance exercise property : Mortgage Finance Exercise Property NOI from a suburban office building is expected to be $8m per annum rising 3% per annum over the next 10 years.

What is the value of three-month european call option : What is the value of a three-month European call option on the futures with a strike price of 122 if the risk-free interest rate is 5% per annum

Impact of verifying income on the likelihood of default : How would you test the impact of verifying income on the likelihood of default?

Equity used is from new stock with flotation cost : What is the company’s WACC if all the equity used is from new stock with flotation cost of 2%?

Combination of securities lies on the security market line : Discuss the following statement: “In equilibrium, every security and combination of securities lies on the Security Market Line”.

Firm cost of equity from retained earnings : Sonya company needs to estimate the cost of equity. What is an estimate of the firm's cost of equity from retained earnings?

Fee charged on any balances transferred : What if there was a 2 percent fee charged on any balances transferred?

Flowchart of the new warehouse system this week : Jack (fake person) shows us a flowchart of the new warehouse system this week.

User Account

All Pages