Amber Marbella is planning to invest on a certain project but will be needing of funds, fortunately its business has sufficient funds using its surplus and reserves for it to finance such project, the dividends to be paid during the current year is 20.00 per share, there is no expected growth for any dividends to be paid. Floatation cost of financing this project is expected to be at 5.00 per share. Based on the market, its share is trading for 50.00 per share. What is the cost of using such funds? a. 55.56% b. 44.44% c. 40% d. 60%
Amber Marbella is planning to invest on a certain project but will be needing of funds, fortunately its business has sufficient funds using its surplus and reserves for it to finance such project, the dividends to be paid during the current year is 20.00 per share, there is no expected growth for any dividends to be paid. Floatation cost of financing this project is expected to be at 5.00 per share. Based on the market, its share is trading for 50.00 per share. What is the cost of using such funds? a. 55.56% b. 44.44% c. 40% d. 60%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Amber Marbella is planning to invest on a certain project but will be needing of funds, fortunately its business has sufficient funds using its surplus and reserves for it to finance such project, the dividends to be paid during the current year is 20.00 per share, there is no expected growth for any dividends to be paid. Floatation cost of financing this project is expected to be at 5.00 per share. Based on the market, its share is trading for 50.00 per share. What is the cost of using such funds?
a. 55.56%
b. 44.44%
c. 40%
d. 60%
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