What is the cost of external equity if its stock

Assignment Help Financial Management
Reference no: EM13917627

A current dividend of $1.80. Dividends are expected to grow at a rate of 7 percent a year into the foreseeable future. What's the cost of external equity if its stock can be sold to net $46 a share?

Reference no: EM13917627

Questions Cloud

Share repurchases tend to increase agency costs : Firms prefer to cut dividend payments rather than borrow money to fund a short-term cash need. Share repurchases tend to increase agency costs. Maintaining a steady dividend is a key goal of most dividend-paying firms.
What is the combined present value of these cash flows : You are scheduled to receive a $480 cash flow in one year, a $780 cash flow in two years, and pay a $380 payment in three years. If interest rates are 9 percent per year, what is the combined present value of these cash flows?
Determine whether or not changes in the cost of capital : Analyze the reasons why the short-term project that you have chosen might be ranked higher under the NPV criterion if the cost of capital is high, while the long-term project might be deemed better if the cost of capital is low. Determine whether or ..
Investor who requires an 8 percent rate of return : ElVonn, Inc., a decorative firsm issued a $1,000 bond with a coupon rate of 8 percent and 20 years to maturity five years ago. If this bond pays interest semiannually, what is the value of this bond (today) to an investor who requires an 8 percent ra..
What is the cost of external equity if its stock : A current dividend of $1.80. Dividends are expected to grow at a rate of 7 percent a year into the foreseeable future. What's the cost of external equity if its stock can be sold to net $46 a share?
Calculate the market capitalization rate : Miltmar Corporation will pay a year-end dividend of $3, and dividends thereafter are expected to grow at the constant rate of 4% per year. The risk-free rate is 5%, and the expected return on the market portfolio is 14%. The stock has a beta of 0.82...
The required rate of return on the market : The risk-free rate of return is 6%, the required rate of return on the market is 12%, and High-Flyer stock has a beta coefficient of 1.7. If the dividend per share expected during the coming year, D1, is $2.80 and g = 5%, at what price should a share..
What would be the annual interest rate : Rip off loan company charges 8.25 percent interest for a two-week period. What would be the annual interest rate from that company?
Projects unit sales for new seven-octave voice emulation : Aguilera Acoustics, Inc., (AAI) projects unit sales for a new seven-octave voice emulation implant as follows:    What is the profitability index for the set of cash flows if the relevant discount rate is 23 percent?

Reviews

Write a Review

Financial Management Questions & Answers

  Compute the accounting rate of return on the project

Calculate the accounting rate of return on the project. Which projects are acceptable according to this criterion? (Note: Assume net income is equal to after-tax cash flow less depreciation)

  Balance sheet equity-income statement shows net income

Fly Away, Inc., has balance sheet equity of $6.8 million. At the same time, the income statement shows net income of $836,400. The company paid dividends of $414,018 and has 200,000 shares of stock outstanding. If the benchmark PE ratio is 32, what i..

  Return on riskier stock exceed that on less risky stock

Required Rate of Return Stock R has a beta of 2.4, Stock S has a beta of 0.65, the expected rate of return on an average stock is 13%, and the risk-free rate is 6%. By how much does the required return on the riskier stock exceed the required return ..

  What changes are occurring in international merger activity

Discuss the differences in merger practices between U.S. companies and companies in other countries. What changes are occurring in international merger activity, particularly in Western Europe and Japan?

  What was its interest expense

YAM Corp. recently reported $3.5million of net income. Its EBIT was $5.25 million, and its tax rate was 30%. What was its interest expense?

  What is the future value-simple rate of interest

What is the future value of $12 deposited today in 5 years when earning 6% simple rate of interest?

  What was the semi-annual current yield

The City of Ames issued a new series of bonds on Jan 1, 2009. The bonds were sold at par ($1,000), have a 3.5% annual coupon rate and mature in 10 years, on Jan 1, 2019. Coupon interest payments are made semi-annually (on June 30 and December 31). Wh..

  Require an effective annual interest rate

You are considering a 15-year, $1,000 par value bond. Its coupon rate is 11%, and interest is paid semiannually. If you require an "effective" annual interest rate (not a nominal rate) of 8.74%, how much should you be willing to pay for the bond?

  How much should be the serial payment

Mary wants to accumulate $45,000 in today's dollar terms in the next 6 years. She expects to earn a return of 6.25% per year and inflation is expected to be 1.75%. How much should be the serial payment in the 1st year so that Mary can achieve the tar..

  Find the sustainable and internal growth rates for a firm

Find the sustainable and internal growth rates for a firm with the following ratios: asset turnover = 1.40; profit margin = 8%; payout ratio = 25%; equity/assets = .70.

  Calculate operating cash flow using different approaches

A proposed new project has projected sales of $131,000, costs of $65,000, and depreciation of $13,400. The tax rate is 35 percent. Calculate operating cash flow using the four different approaches.

  Benchmark index has three stocks priced-index value

A benchmark index has three stocks priced at $34, $57, and $67. The number of outstanding shares for each is 405,000 shares, 515,000 shares, and 663,000 shares, respectively. If the market value weighted index was 920 yesterday and the prices changed..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd