What would be the cost of new common stock equity

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Problem 1: What would be the cost of new common stock equity for Tangshan Mining if the firm just paid a dividend of $4.25, the stock price is $55.00, dividends are expected to grow at 8.5 percent indefinitely, and flotation costs are $6.25 per share?

A) 17.96%

B) 9.46%

C) 16.88%

D) none of the above

Problem 2: What is the NPV for the following project if its cost of capital is 15 percent and its initial after tax cost is $5,000,000 and it is expected to provide after- tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $1,700,000 in year 3 and $1,300,000 in year 4?

A) ($137,053)

B) $1,700,000

C) $371,764

D) none of the above A

Reference no: EM132944255

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