Find the cost of new issue of common stock

Reference no: EM131975144

Question: A firm has common stock with a market price of $50 per share and an expected dividend of $2.78 per share at the end of the coming year. The dividends are expected to grow at a constant rate of 5% per year. A new issue of stock is expected to be sold for $48 after $1 per share underpricing and $1 per share flotation costs are deducted from the market price. The cost of this new issue of common stock is?

Reference no: EM131975144

Questions Cloud

Test the hypothesis that the proportion of consumer : At a = 0.05 and 0.10, test the hypothesis that the proportion of Consumer (CON) industry companies winter quarter profit growth is more than 2 percentage

How much does the issuing company receive : With a firm commitment underwriting, an investment bank agrees to sell 2 million shares to the public at $10 per share with a spread of $1.00.

What is the chance of observing 3 heads and 2 tails : A coin is drawn at random from the basket with equal probability and tossed 5 times.

The present value of the decrease in coupon payments : Huron Investments issues $4 million in 13.000% bonds maturing April 27, 2042. The present value of the decrease in coupon payments is ________

Find the cost of new issue of common stock : A firm has common stock with a market price of $50 per share and an expected dividend of $2.78 per share at the end of the coming year.

Culate the weighted-average unit contribution margin : Seascape Company has two products: Product A has a contribution. Calculate the weighted-average unit contribution margin if Seascape has a 25/75 product mix.

Determining the sampling distribution : According to the Central Limit Theorem, what should the (theoretical) value of sx¯ equal for your specific x4distr2 sampling distribution?

The probability of default on the burger king bond : Alcoa will default on the bond then the market also assumes that the probability of default on the Burger King bond

Determine the cost of the december finished-goods inventory : Scranton Refrigeration Corporation began operations at the beginning of the current year. Determine the cost of the December 31 finished-goods inventory.

User Account

All Pages