What is company cost of common equity

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Reference no: EM132021380

Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $1.50 coming 3 years from today. The dividend should grow rapidly - at a rate of 29% per year - during Years 4 and 5; but after Year 5, growth should be a constant 5% per year. If the required return on Microtech is 18%, what is the value of the stock today? Round your answer to the nearest

Javits & Sons' common stock currently trades at $40.00 a share. It is expected to pay an annual dividend of $1.25 a share at the end of the year (D1 = $1.25), and the constant growth rate is 6% a year.

What is the company's cost of common equity if all of its equity comes from retained earnings? Round your answer to two decimal places. %

If the company were to issue new stock, it would incur a 9% flotation cost. What would the cost of equity from new stock be? Round your answer to two decimal places.

Reference no: EM132021380

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