Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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JP Morgan Corporation's stock currently trades at $100 per share, the stock expects to pay an $8 dividend this year and the stock has a perpetual growth rate of 5%. What is the cost of new common equity if JP Morgan pays 6% in flotation costs?
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- Jarett & Sons's common stock currently trades at $39.00 a share. It is expected to pay an annual dividend of $3.00 a share at the end of the year (D1 = $3.00), and the constant growth rate is 6% a year. What is the company's cost of common equity if all of its equity comes from retained earnings? Do not round intermediate calculations. Round your answer to two decimal places. %___ If the company issued new stock, it would incur a 10% flotation cost. What would be the cost of equity from new stock? Do not round intermediate calculations. Round your answer to two decimal places. %___arrow_forwardTopstone Industries just paid an annual dividend of $2.00 per share this year. This dividend, along with the firm's earnings, is expected to grow at a rate of 5% per annum forever. If the current market price for a share of Topstone is $38.61, what is the implied cost of equity? O A. O B. 10.44% O D. 11.22% O C. 10.71% 10.18% OE. 5.36% 7arrow_forwardSuppose ABC Corp is expected to pay $2.00 per year in dividends per share for the foreseeable future. If the required return on their stocks is 12.15%, what is one share worth?arrow_forward
- HighGrowth Company has a stock price of $18. The firm will pay a dividend next year of $1.15, and its dividend is expected to grow at a rate of 3.5% per year thereafter. What is your estimate of HighGrowth's cost of equity capital? The required return (cost of capital) of levered equity is%. (Round to one decimal place.)arrow_forwardJarett & Sons's common stock currently trades at $22.00 a share. It is expected to pay an annual dividend of $2.25 a share at the end of the year (D1 = $2.25), and the constant growth rate is 4% a year. What is the company's cost of common equity if all of its equity comes from retained earnings? Do not round intermediate calculations. Round your answer to two decimal places. % If the company issued new stock, it would incur an 11% flotation cost. What would be the cost of equity from new stock? Do not round intermediate calculations. Round your answer to two decimal places. %arrow_forwardGillette Corporation will pay an annual dividend of $0.61 one year from now. Analysts expect this dividend to grow at 11.4% per year thereafter until the 5th year. Thereafter, growth will level off at 2.2% per year. According to the dividend discount model, what is the value of a Gillette share if the firm's equity cost of capital is 8.9% ?arrow_forward
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