Quantitative Problem: Barton Industries expects next year's annual dividend, D1, to be $2.00 and it expects dividends to grow at a constant rate g = 4.9%. The firm's current common stock price, P0, is $23.50. If it needs to issue new common stock, the firm will encounter a 4.9% 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.  %

Stormy Weather has no attractive investment opportunities. Its return on equity equals the discount rate, which is 5%. Its expected earnings this year are $2 per share. Complete the following table. (Leave no cells blank. Enter a zero, wherever necessary. Do not round intermediate calculations. Round growth rate to two decimal places.)         Plowback Ratio Growth Rate Stock Price P/E Ratio a. 0   %     b. 0.40   %     c. 0.60   %

Investors require an 8% rate of return on Mather Company's stock (i.e., rs = 8%). What is its value if the previous dividend was D0 = $3.75 and investors expect dividends to grow at a constant annual rate of (1) -7%, (2) 0%, (3) 3%, or (4) 6%? Do not round intermediate calculations. Round your answers to the nearest cent. (1) $    (2) $    (3) $    (4) $    Using data from part a, what would the Gordon (constant growth) model value be if the required rate of return was 8% and the expected growth rate was (1) 8% or (2) 12%? Round your answers to the nearest cent. If the value is undefined, enter N/A. (1) $    (2) $    Are these reasonable results? These results show that the formula does not make sense if the required rate of return is equal to or greater than the expected growth rate. These results show that the formula makes sense if the required rate of return is equal to or less than the expected growth rate. These results show that the formula makes sense if the required rate…

Holt Enterprises recently paid a dividend, D0, of $3.50. It expects to have nonconstant growth of 23% for 2 years followed by a constant rate of 9% thereafter. The firm's required return is 12%.  What is the firm's horizon, or continuing, value? Do not round intermediate calculations. Round your answer to the nearest cent.   What is the firm's intrinsic value today, ? Do not round intermediate calculations. Round your answer to the nearest cent.