What would be the cost of new equity

Assignment Help Finance Basics

Reference no: EM131962894

Question: Cost of Common Equity with Flotation

Banyan Co.'s common stock currently sells for $40.00 per share. The growth rate is a constant 14.4%, and the company has an expected dividend yield of 6%. The expected long-run dividend payout ratio is 20%, and the expected return on equity (ROE) is 18%. New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. What would be the cost of new equity? Round your answer to two decimal places. Do not round your intermediate calculations.

Reference no: EM131962894

Questions Cloud

Calculate the beta portfolio : Calculate the beta portfolio. Round the answers to two decimal places. If possible, please display in excel or show actual calculation.

What do you notice about the price and the cost of debt : Cost of debt. Kenny Enterprises has just issued a bond with a par value of $1,000, a maturity of twenty years, and a a coupon rate of 9.79.7%.

How much money should he place today in a saving account : How much money should he place today in a saving account that earns 5.16 percent per year (compounded daily) to accumulate money for his down payment?

What is the companys weighted average cost of capital : What is the company's weighted average cost of capital (WACC)? Express your answer in percentage (without the % sign) and round it to two decimal places.

What would be the cost of new equity : Banyan Co.'s common stock currently sells for $40.00 per share. The growth rate is a constant 14.4%, and the company has an expected dividend yield of 6%.

Finding the firm after-tax cost of debt : Gillian Stationery Corporation needs to raise ?$575,000 to improve its manufacturing plant. It has decided to issue a $1,000 par value bond with an annual.

Identify the control variables used in the study : ACC8000 Research in Accounting Practice - Identify and explain whether the hypothesis has been written as directional or nondirectional and What is the purpose

Microsoft organizational culture : What impact do you think this acquisition will have on Microsoft organizational culture? On LinkedIn's organizational culture?

What is the estimate of the stocks price today : John is looking to value a particular stock that is expected to pay the dividend of $1.80 at the end of each year for at least the next few years.

User Account

All Pages