Expected cash dividends are $2, the dividend yield is 6%, flotation costs are 3% of price, and the growth rate is 4%. Compute the approximate cost of new common stock. a. 12.29% b. 11.19% c. 10.19% d. 9.94%

Expected cash dividends are $2, the dividend yield is 6%, flotation costs are 3% of price, and the growth rate is 4%. Compute the approximate cost of new common stock. a. 12.29% b. 11.19% c. 10.19% d. 9.94%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 13P: The Cost of Equity and Flotation Costs Messman Manufacturing will issue common stock to the public...

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Question

Compute the approximate cost of new common stock on these financial accounting question?

Expected cash dividends are $2, the dividend yield is 6%, flotation costs are 3%
of price, and the growth rate is 4%.
Compute the approximate cost of new common stock.
a. 12.29%
b. 11.19%
c. 10.19%
d. 9.94%

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