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Barton Industries expects next year's annual dividend, D1, to be $1.70 and it expects dividends to grow at a constant rate g = 5%. The firm's current common stock price, P0, is $22.80. If it needs to issue new common stock, the firm will encounter a 5.2% flotation cost, F. Assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. What is the flotation cost adjustment that must be added to its cost of retained earnings? Round your answer to 2 decimal places. Do not round intermediate calculations.
flotation cost adjustment__________ %
What is the cost of new common equity considering the estimate made from the three estimation methodologies?
Round your answer to 2 decimal places. Do not round intermediate calculations.
Bell Mountain Vineyards is considering updating its current manual accounting system with a high-end electronic system. While the new accounting system would save the company money, the cost of the system continues to decline.
If the firm is fully equity-financed, what is its value? - Using APV, if the firm is financed with equal amounts of debt and equity today, what is its value?
Expected Return Standard Deviation. If you have capital to invest into only 1 asset, which one would you select? Why? Now that you have the resource to invest into both assets, will your decision change? Why?
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