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What is the cost of the common shares for Vihaan

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Reference no: EM132969072

Question - Vihaan Co. has 5,000,000 common shares outstanding, which are currently trading at $55.00 per share. The shares recently paid a dividend of $4.00 per share and analysts expect the dividend to grow at 3.5% per year into the foreseeable future. Flotation costs are expected to be 6% before tax on the issue of common shares. Vihaan has an income tax rate of 28%. What is the cost of the common shares for Vihaan?

a) 7.87%

b) 11.24%

c) 11.37%

d) 11.85%

Reference no: EM132969072

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