Blue Co.’s stock sells for P40 per stock with last dividend amounted to P4. The growth rate is will remain the same in the foreseeable future at 2%. Blue Co. will incur a flotation cost of 10% on selling new ordinary stocks in the primary market. Compute for Blue Co. cost of new equity.

Blue Co.’s stock sells for P40 per stock with last dividend amounted to P4. The growth rate is will remain the same in the foreseeable future at 2%. Blue Co. will incur a flotation cost of 10% on selling new ordinary stocks in the primary market. Compute for Blue Co. cost of new equity.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 12P

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