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Blue Co.’s has insufficient retained earnings to fund capital projects and the firm decided to issue new common stock. Blue Co.’s stock currently has a price of P25 per share. Expected year-end dividend of P2.5 per share is anticipated. The dividend is expected to grow at a constant rate of 1% per year. The cost of new equity is determined at 13.5%. What is the floatation cost in peso?

Blue Co.’s has insufficient retained earnings to fund capital projects and the firm decided to issue new common stock. Blue Co.’s stock currently has a price of P25 per share. Expected year-end dividend of P2.5 per share is anticipated. The dividend is expected to grow at a constant rate of 1% per year. The cost of new equity is determined at 13.5%. What is the floatation cost in peso?

Essentials Of Investments
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
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Blue Co.’s has insufficient retained earnings to fund capital projects and the firm decided to issue new common stock. Blue Co.’s stock currently has a price of P25 per share. Expected year-end dividend of P2.5 per share is anticipated. The dividend is expected to grow at a constant rate of 1% per year.  The cost of new equity is determined at 13.5%. What is the floatation cost in peso?

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