Banyan Co.'s common stock currently sells for $43.25 per share. The growth rate is a constant 6%, and the company has an expected dividend yield of 2%. The expected long-run dividend payout ratio is 20%, and the expected return on equity (ROE) is 7.5%. 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? Do not round intermediate calculations. Round your answer to two decimal places. %
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- A company’s common stock currently sells for $56.00 per share. The growth rate is a constant 6%, and the company has an expected dividend yield of 7%. The expected long run dividend payout ratio is 20%, and the expected return on equity (ROE) is 7.5%. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of new equity?Weaver Chocolate Co. expects to earn $4.00 per share during the current year, its expected dividend payout ratio is 70%, its expected constant dividend growth rate is 6.0%, and its common stock currently sells for $45.00 per share. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of equity from new common stock? Do not round your intermediate calculations. O a. 11.93% O b. 15.36% O c. 12.55% O d. 12.22% O e. 12.94%Eakins Inc.'s common stock currently sells for $15.00 per share, the company expects to earn $2.75 per share during the current year, its expected payout ratio is 70%, and its expected constant growth rate is 6.00%. New stock can be sold to the public at the current price, but a flotation cost of 8% would be incurred. By how much would the cost of new stock exceed the cost of retained earnings? Do not round your intermediate calculations. a. 0.67% О b. 1.12% O c. 0.78% O d. 1.45% O e. 0.89%
- Eakins Inc.’s common stock currently sells for $22.50 per share, the company expects to earn $2.75 per share during the current year, its expected payout ratio is 70%, and its expected constant growth rate is 6.00%. New stock can be sold to the public at the current price, but a flotation cost of 8% would be incurred. By how much would the cost of new stock exceed the cost of retained earnings? Do not round your intermediate calculations.Eakins Inc.’s common stock currently sells for $50.00 per share, the company expects to earn $2.75 per share during the current year, its expected payout ratio is 70%, and its expected constant growth rate is 6.00%. New stock can be sold to the public at the current price, but a flotation cost of 8% would be incurred. By how much would the cost of new stock exceed the cost of retained earnings?Weaver Brothers expects to earn $3.50 per share (E1) and has an expected dividend payout ratio of 60%. Its expected constant dividend growth rate is 7.0% and its common stock currently sells for $30 per share. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of equity from new common stock?Your answer should be between 10.15 and 16.90, rounded to 2 decimal places, with no special characters.
- eBook Banyan Co.'s common stock currently sells for $43.50 per share. The growth rate is a constant 6%, and the company has an expected dividend yield of 6%. The expected long-run dividend payout ratio is 30%, and the expected return on equity (ROE) is 6%. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. Wwhat would be the cost of new equity? Do not round intermediate calculations. Round your answer to two decimal places. %Barton Industries expects next year's annual dividend, D1, to be $2.30 and it expects dividends to grow at a constant rate g = 4.9%. The firm's current common stock price, P0, is $25.00. If it needs to issue new common stock, the firm will encounter a 4.5% flotation cost, F. What is the flotation cost adjustment that must be added to its cost of retained earnings? Do not round intermediate calculations. Round your answer to two decimal places. _____% What is the cost of new common equity considering the estimate made from the three estimation methodologies? Do not round intermediate calculations. Round your answer to two decimal places. _____%Barton Industries expects next year's annual dividend, D1, to be $2.40 and it expects dividends to grow at a constant rate g = 4.4%. The firm's current common stock price, P0, is $21.40. If it needs to issue new common stock, the firm will encounter a 5% 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? Do not round intermediate calculations. Round your answer to two decimal places. % What is the cost of new common equity considering the estimate made from the three estimation methodologies? Do not round intermediate calculations. Round your answer to two decimal places. %
- The stock of Gao Computing sells for $55, and last year's dividend was $2.10. A flotation cost of 10% would be required to issue new common stock. Gao's preferred stock pays a dividend of $3.30 per share, and new preferred could be sold at a price to net the company $30 per share. Security analysts are projecting that the common dividend will grow at a rate of 7% a year. The firm can also issue additional long-term debt at an interest rate (or before-tax cost) of 10%, and its marginal tax rate is 35%. The market risk premium is 6 %, the risk-free rate is 6.5%, and Gao's beta is 0.83. In its cost of capital calculations, Gao uses a target capital structure with a 45 % debt, 5 % preferred stock, and 50 % common equity. d.) Assuming that Gao will not issue new equity and will continue to use the same target capital structure, what is the company's WACC? e.) Suppose Gao is evaluating three projects with the following characteristics: (1) Each project has a cost of $1 million. They will…The stock of Gao Computing sells for $55, and last year's dividend was $2.10. A flotation cost of 10% would be required to issue new common stock. Gao's preferred stock pays a dividend of $3.30 per share, and new preferred could be sold at a price to net the company $30 per share. Security analysts are projecting that the common dividend will grow at a rate of 7% a year. The firm can also issue additional long-term debt at an interest rate (or before-tax cost) of 10%, and its marginal tax rate is 35%. The market risk premium is 6 %, the risk-free rate is 6.5%, and Gao's beta is 0.83. In its cost of capital calculations, Gao uses a target capital structure with a 45% debt, 5% preferred stock, and 50% common equity. a.) Calculate the cost of each capital component (that is, the after-tax cost of debt), the cost of preferred stock(including flotation costs), and the cost of equity (ignoring flotation costs) with the DCF method and the CAPM method. b.) Calculate the cost of new…Southern Power just paid an annual dividend of $6.1 per share. Because of increasing competition from home solar installations, the dividend is expected to shrink by 3% per year. The required rate of return is 8%. What is the intrinsic value of the stock?