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Nominal annual percentage cost of non-free trade credit

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You have been provided with the following data: its most recently paid dividend is $1.25; its current market price is $32.50; its ROE = 12% and its dividend payout ratio is 40%. New common stock will have an 8% flotation cost. Based on the DCF approach and the Retention Growth Model, what is the cost of equity from new common stock?

Cash Poor, Inc. (CPI) buys on terms of 2/10, net 45. CPI does not take the discount, and it generally pays after 60 days. What is the nominal annual percentage cost of its non-free trade credit, based on a 365-day year?

Reference no: EM132411098

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