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Barton Industries expects next year's annual dividend, D1, to be $2.40 and it expects dividends to grow at a constant rate g = 5%. The firm's current common stock price, P0, is $21.80. If it needs to issue new common stock, the firm will encounter a 5.3% 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%.
1. 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.
2. 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.
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Features of Bo-knows Enterprises Bond and Stock. In March 2011, the yield of similar risk bonds was 7%, what was the price of this bond then?
Da Feng is looking to refinance his home because rates have gone down since he purchased the house 5 years ago. He started with a 30-year fixed-rate mortgage of $213,000 at an annual rate of 6.70%. He has to make monthly payments. He can now get a 25..
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Telfony Inc. expects an EBIT of $4,000,000 for the current year. The firm's capital structure consists of 40% debt and 60% equity, and its marginal tax rate is 40%. Comparer and contrast tax-preference, bird-in-hand, and clinetele effect theoriesof d..
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Will the project increase the value of the firm, decrease it, or have no impact on the value of the firm?
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