What is the cost of common equity from reinvested earnings

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Reference no: EM131986740

1. To help estimate its cost of common equity, the Lincoln Company recently hired you. You have obtained the following data: D0 = $0.95; P0 = $27.25; and g = 7.50% (constant). Based on the DCF approach, what is the cost of common equity from reinvested earnings?

A. 9.29%

B. 9.68%

C. 10.50%

D. 11.25%

2. The Lincoln Company sold a $1,000 par value, noncallable bond several years ago that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $925 and the company's tax rate is 30%. What is the component cost of debt for use in the WACC calculation?

A. 4.28%

B. 4.46%

C. 4.65%

D. 5.42%

Reference no: EM131986740

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