Marginal cost of equity, Vertrice Industries expects to

Marginal cost of equity

Reference no: EM1338424

Vertrice Industries expects to earn $400 million in after-tax income this year. Currently, Vertrice Industry stock is selling for $25 per share and the current annual dividend of $2 is expected to increase by 6% per year. Flotation costs are estimated at 10%. If it has a dividend payout ratio of 75% and a capital structure of 50% debt and 50% common equity, calculate what its marginal cost of equity capital will be if it must fund a capital budget of $800 million with equity capital.

Reference no: EM1338424

Questions Cloud

Give degradation affect the generation of action potentials : give degradation affect the generation of action potentials.

Explain briefly why capital is the fixed factor in the short : Explain briefly why capital is the fixed factor in the short run, and not labor.

Purpose of a problem solving meeting : Provide your thoughts on what the purpose of a problem solving meeting is and how would one be conducted?

Was the hypothesis supported and what is your conclusion : Was the hypothesis supported and What is your conclusion

Marginal cost of equity : Vertrice Industries expects to earn $400 million in after-tax income this year. Calculate what its marginal cost of equity capital will be if it must fund a capital budget of $800 million with equity capital.

Possible steps included in project closure : What are possible steps included in project closure?

What is principle of the indole test process : Is a catalase test perfromed on colonies from a BAP? State reasons to support your answer.

Roman emperors seizing power : What circumstances allowed Roman Emporors to seize and maintain power?

Explain about finance : Explain about Finance and What are the main inputs needed to begin the financial portion of a strategic plan

User Account

All Pages