Please given step by step answer general Accounting question TechGrow Corporation paid a dividend yesterday of$3.00 per share. The dividend is expected to grow at aconstant rate of 4% per year. The current stock price is$30 per share. If TechGrow decides to issue newcommon stock, flotation costs will equal $2.50 pershare.

Step 1: Define External FinancingExternal financing refers to the process of raising capital from…

Answered: TechGrow Corporation paid a dividend…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 8P

See similar textbooks

Similar questions

Ren Sun Rising just paid a dividend of $2.43 per share. The company said that it will increase the dividend by 15 percent and 10 over the next two years respectively. After that, the company is expected to increase its annual dividend at 4.1 percent. If the require return is 11.5 percent, what is the stock price today?
Arcs and Triangles paid an annual dividend of $1.47 a share last month. The company is planning on paying $1.52, $1.58, and $1.60 a share over the next three years, respectively. After that, the dividend will be constant at $1. 79 per share per year. What is the market price of this stock if the market rate of return is 10.0 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Tinicum Air Freight Inc. will pay an annual dividend of S4.85 a share next year with future dividends increasing by 2.12 percent annually. What is the stock's Cost of Equity if the stock is currently selling for $34.57 a share?
Boehm Incorporated is expected to pay a $2.70 per share dividend at the end of this year (i.e., D1 = $2.70). The dividend is expected to grow at a constant rate of 8% a year. The required rate of return on the stock, rs, is 16%. What is the estimated value per share of Boehm's stock? Do not round intermediate calculations. Round your answer to the nearest cent.
DeSoto’s, Inc. has announced that its next annual dividend has been set at $3.75 per share. The company also announced that future dividends will be increasing at a constant rate of 4.0 percent. If you require an 11.5 percent rate of return, how much are you willing to pay to purchase one share of DeSoto’s stock?
XYZ company's common shares are selling for P30.00 per share, and the company expects to set its next annual dividend at P1.50 per share. All future dividends are expected to grow by 6% per year, indefinitely. In addition, XYZ faces a floatation cost of 20% on new equity issues. What is the floatation-adjusted cost of equity? Express your answer in percentage.
Boehm Incorporated is expected to pay a $1.40 per share dividend at the end of this year (i.e., D1 = $1.40). The dividend is expected to grow at a constant rate of 6% a year. The required rate of return on the stock, rs, is 18%. What is the estimated value per share of Boehm's stock? Do not round intermediate calculations.
Mclver's Meals, Inc. currently pays a OMR2 annual dividend. Investors believe that dividends will grow at 20% next year, 12% annually for the two years after that, and 6% annually thereafter. Assume the required return is 10%. What is the current market price of the stock? Select one: O a. OMR69.30 O b.OMR75.20 O c. OMR66.60 O d. OMR60.80 O e. OMR54.99
Red Sun Rising just paid a dividend of $2.58 per share. The company said that it will increase the dividend by 20 percent and 15 percent over the next two years, respectively. After that, the company is expected to increase its annual dividend at 3.6 percent. If the required return is 12 percent, what is the stock price today?
Tresnan Brothers is expected to pay a $1.60 per share dividend at the end of the year (i.e., D1 = $1.60). The dividend is expected to grow at a constant rate of 9% a year. The required rate of return on the stock, rs, is 17%. What is the stock's current value per share? Round your answer to the nearest cent. $ ______ Travis Industries plans to issue perpetual preferred stock with an $11.00 dividend. The stock is currently selling for $106.00, but flotation costs will be 7% of the market price, so the net price will be $98.58 per share. What is the cost of the preferred stock, including flotation? Round your answer to two decimal places. ________ %
BLT Ltd last paid a dividend of $0.20 three years ago. Today the company announced they will resume paying dividends. The planned dividends are $0.50 in one year's time, $0.60 in two years' time, and thereafter dividends will increase by a constant rate of 4% p.a. indefinitely. If the required rate of return for BLT is 12%, what is a fair price for one share today? a. $7.14 b. $7.50 c. $0.45 d. $6.70 e. $7.34
Newman Manufacturing is considering a cash purchase of the stock of Grips Tool. During the year just completed, Grips earned $3.95 per share and paid cash dividends of $2.25 per share (D0equals=$ 2.25). Grips' earnings and dividends are expected to grow at 25% per year for the next 3 years, after which they are expected to grow 6% per year to infinity. What is the maximum price per share that Newman should pay for Grips if it has a required return of 11% on investments with risk characteristics similar to those of Grips?

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Corporate Fin Focused Approach

Finance

ISBN:

9781285660516

Author:

EHRHARDT

Publisher:

Cengage

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning

Corporate Fin Focused Approach

Finance

ISBN:

9781285660516

Author:

EHRHARDT

Publisher:

Cengage

SEE MORE TEXTBOOKS

TechGrow Corporation paid a dividend yesterday of $3.00 per share. The dividend is expected to grow at a constant rate of 4% per year. The current stock price is $30 per share. If TechGrow decides to issue new common stock, flotation costs will equal $2.50 per share.