What is the flotation cost adjustment

Assignment Help Financial Management

Reference no: EM13923850

Barton Industries expects next year's annual dividend, D1, to be $1.80 and it expects dividends to grow at a constant rate g = 4.5%. The firm's current common stock price, P0, is $22.90. If it needs to issue new common stock, the firm will encounter a 4.8% flotation cost, F. Assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. What is the flotation cost adjustment that must be added to its cost of retained earnings? Round your answer to 2 decimal places. Do not round intermediate calculations.

Reference no: EM13923850

Questions Cloud

Fundamental attribution error : The process of assigning traits to people based on their membership in an identifiable social category is called: The contact hypothesis states that: Which of the following describes the fundamental attribution error?

Project selection midwest water works estimates : Project Selection Midwest Water Works estimates that its WACC is 10.5%. The company is considering the following capital budgeting projects: Assume that each of these projects is just as risky as the firm’s existing assets and that the firm may accep..

Compute two-year implied forward rate three years from now : Compute, under the pure expectations theory, the two-year implied forward rate three years from now, given the information provided in the preceding table.

Economics most relevant to managerial decision-making : The form of economics most relevant to managerial decision-making within the firm is:

What is the flotation cost adjustment : Barton Industries expects next year's annual dividend, D1, to be $1.80 and it expects dividends to grow at a constant rate g = 4.5%. The firm's current common stock price, P0, is $22.90. What is the flotation cost adjustment that must be added to its..

Corrections and delinquency intervention/prevention programs : Corrections and Delinquency Intervention/Prevention Programs. Use the University Library to locate a journal article encompassingsuch topics as: corrections, jails, prisons, rehabilitation, or boot camps. You can use your research in your Final Pa..

Implication of the fourdrive theory of motivation : According to expectancy theory, an unwanted reward has: The main implication of the fourdrive theory of motivation is that ABC Corp. brought in a performancebased reward system that accurately identified employees who performed better than others...

Write the source code for each class in a separate file : Write the source code for each class in a separate file, which must have the same name as the class name together with the extension. java. Class names commence with a capital letter

What is the price to earnings ratio : The following information is available for the Oil Creek Corporation. Accounts receivable $19,000. Sales $195,000. Current assets $36,000. Total assets $147,000. Debt $90,000. Long term debt $48,000. Current liabilities $41,000. Profit margin 6% Numb..

User Account

All Pages