FSIBL has a book value of Tk 10 per share. Company's market capitalization rate is 12%. The company plans to invest a significant portion of their newly raised capital from IPO for network improvement. Analysts expect that return on equity will be 20% for the next four years and the company plans to retain 100% of their profit for further investment. After year 4, the ROE is expected to drop 10% and payout ratio increases to 0.7 and will continue to do forever. If the market value of the company is 27 Taka, give a recommendation based on the intrinsic value of the stock.
Cost of Debt, Cost of Preferred Stock
This article deals with the estimation of the value of capital and its components. we'll find out how to estimate the value of debt, the value of preferred shares , and therefore the cost of common shares . we will also determine the way to compute the load of every cost of the capital component then they're going to estimate the general cost of capital. The cost of capital refers to the return rate that an organization gives to its investors. If an organization doesn’t provide enough return, economic process will decrease the costs of their stock and bonds to revive the balance. A firm’s long-run and short-run financial decisions are linked to every other by the assistance of the firm’s cost of capital.
Cost of Common Stock
Common stock is a type of security/instrument issued to Equity shareholders of the Company. These are commonly known as equity shares in India. It is also called ‘Common equity
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