Face value of equity shares of a company is ? 10, while current market price is7 200 per share. Company is going to start a new project, and is planning tofinance it partially by new issue and partially by retained earnings. You arerequired to CALCULATE cost of equity shares as well as cost of retained earnings ifissue price will be 7 190 per share and floatation cost will be 5 per share.Dividend at the end of first year is expected to be ? 10 and growth rate will be 5%.

We are given that, Face value of equity share = ₹ 10 Current market price = ₹ 200 Issue price per…

Answered: Face value of equity shares of a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Weston Corporation just paid a dividend of $2.5 a share (i.e., Do = $2.5). The dividend is expected to grow 12% a year for the next 3 years and then at 4% a year thereafter. What is the expected dividend per share for each of the next 5 years? Do not round intermediate calculations. Round your answers to the nearest cent. D₁ = $ D₂ = $ D3 = $ D4 = $ D5 = $
C) Trusty gets’ Lucky Ltd., just paid a dividend of $2.00 per share. The managing director just announced that it is planned to increase dividends at a rate of 6% indefinitely. An appropriate discount rate for this company is 16% per annum. What is the firm’s expected dividend stream over the next 3 years? What is the firm’s current stock price? What is the firm’s expected value in one year? What are the expected dividend yield, capital gains yield and total return during the first year?
BB8 Mining has a payout ratio of 30% and is due to pay a dividend of $2.30 next year. The stock is currently trading at $45 and the return on equity (ROE) is 15%. Using the dividend discount model, what is the cost of equity capital for BB8?
DPS CalculationThress Industries just paid a dividend of $1.50 a share (i.e., D0 5 $1.50). Thedividend is expected to grow 5% a year for the next 3 years and then 10% ayear thereafter. What is the expected dividend per share for each of the next5 years?
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