The past growth rate in the earnings. Cost of Equity : It is the cost of the company while raising finance by issuing equity. It is earnings from the investment to the firm’s equity investors. It is the return to the stockholder holders’ equity investments.

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Answer 1

Question

Chapter 10, Problem 16P

a.

Summary Introduction

To calculate: The past growth rate in the earnings.

Cost of Equity:

It is the cost of the company while raising finance by issuing equity. It is earnings from the investment to the firm’s equity investors. It is the return to the stockholder holders’ equity investments.

b.

Summary Introduction

To calculate: The next expected dividend D1, assuming the past growth rate continues.

c.

Summary Introduction

To identify: The cost of retained earnings.

Cost of Retained Earnings:

A company can raise its capital by issuing new shares of by retaining its current earnings. The retained earnings is assumed as free cost generally but it is wrong because the cost of retained earnings can be measured as per opportunity cost principle.

If the company has no retained earning company issues new shares in which the shareholders earn the dividend. Thus, the loss of dividend can be considered as opportunity cost of the retained earnings.

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Answer 2

Question

Chapter 10, Problem 16P

a.

Summary Introduction

To calculate: The past growth rate in the earnings.

Cost of Equity:

It is the cost of the company while raising finance by issuing equity. It is earnings from the investment to the firm’s equity investors. It is the return to the stockholder holders’ equity investments.

b.

Summary Introduction

To calculate: The next expected dividend D1, assuming the past growth rate continues.

c.

Summary Introduction

To identify: The cost of retained earnings.

Cost of Retained Earnings:

A company can raise its capital by issuing new shares of by retaining its current earnings. The retained earnings is assumed as free cost generally but it is wrong because the cost of retained earnings can be measured as per opportunity cost principle.

If the company has no retained earning company issues new shares in which the shareholders earn the dividend. Thus, the loss of dividend can be considered as opportunity cost of the retained earnings.

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Answer 3

Question

Chapter 10, Problem 16P

a.

Summary Introduction

To calculate: The past growth rate in the earnings.

Cost of Equity:

It is the cost of the company while raising finance by issuing equity. It is earnings from the investment to the firm’s equity investors. It is the return to the stockholder holders’ equity investments.

b.

Summary Introduction

To calculate: The next expected dividend D1, assuming the past growth rate continues.

c.

Summary Introduction

To identify: The cost of retained earnings.

Cost of Retained Earnings:

A company can raise its capital by issuing new shares of by retaining its current earnings. The retained earnings is assumed as free cost generally but it is wrong because the cost of retained earnings can be measured as per opportunity cost principle.

If the company has no retained earning company issues new shares in which the shareholders earn the dividend. Thus, the loss of dividend can be considered as opportunity cost of the retained earnings.

Expert Solution & Answer

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Answer 4

Question

Chapter 10, Problem 16P

a.

Summary Introduction

To calculate: The past growth rate in the earnings.

Cost of Equity:

It is the cost of the company while raising finance by issuing equity. It is earnings from the investment to the firm’s equity investors. It is the return to the stockholder holders’ equity investments.

b.

Summary Introduction

To calculate: The next expected dividend D1, assuming the past growth rate continues.

c.

Summary Introduction

To identify: The cost of retained earnings.

Cost of Retained Earnings:

A company can raise its capital by issuing new shares of by retaining its current earnings. The retained earnings is assumed as free cost generally but it is wrong because the cost of retained earnings can be measured as per opportunity cost principle.

If the company has no retained earning company issues new shares in which the shareholders earn the dividend. Thus, the loss of dividend can be considered as opportunity cost of the retained earnings.

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Answer 5

Chapter 10, Problem 16P

a.

Summary Introduction

To calculate: The past growth rate in the earnings.

Cost of Equity:

It is the cost of the company while raising finance by issuing equity. It is earnings from the investment to the firm’s equity investors. It is the return to the stockholder holders’ equity investments.

b.

Summary Introduction

To calculate: The next expected dividend D1, assuming the past growth rate continues.

c.

Summary Introduction

To identify: The cost of retained earnings.

Cost of Retained Earnings:

A company can raise its capital by issuing new shares of by retaining its current earnings. The retained earnings is assumed as free cost generally but it is wrong because the cost of retained earnings can be measured as per opportunity cost principle.

If the company has no retained earning company issues new shares in which the shareholders earn the dividend. Thus, the loss of dividend can be considered as opportunity cost of the retained earnings.

Answer 6

Chapter 10, Problem 16P

a.

Summary Introduction

To calculate: The past growth rate in the earnings.

Cost of Equity:

It is the cost of the company while raising finance by issuing equity. It is earnings from the investment to the firm’s equity investors. It is the return to the stockholder holders’ equity investments.

Answer 7

Chapter 10, Problem 16P

a.

Summary Introduction

To calculate: The past growth rate in the earnings.

Cost of Equity:

It is the cost of the company while raising finance by issuing equity. It is earnings from the investment to the firm’s equity investors. It is the return to the stockholder holders’ equity investments.

Answer 8

b.

Summary Introduction

To calculate: The next expected dividend D1, assuming the past growth rate continues.

Answer 9

b.

Summary Introduction

To calculate: The next expected dividend D1, assuming the past growth rate continues.

Answer 10

c.

Summary Introduction

To identify: The cost of retained earnings.

Cost of Retained Earnings:

A company can raise its capital by issuing new shares of by retaining its current earnings. The retained earnings is assumed as free cost generally but it is wrong because the cost of retained earnings can be measured as per opportunity cost principle.

If the company has no retained earning company issues new shares in which the shareholders earn the dividend. Thus, the loss of dividend can be considered as opportunity cost of the retained earnings.

Answer 11

c.

Summary Introduction

To identify: The cost of retained earnings.

Cost of Retained Earnings:

A company can raise its capital by issuing new shares of by retaining its current earnings. The retained earnings is assumed as free cost generally but it is wrong because the cost of retained earnings can be measured as per opportunity cost principle.

If the company has no retained earning company issues new shares in which the shareholders earn the dividend. Thus, the loss of dividend can be considered as opportunity cost of the retained earnings.

Answer 12

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Answer 13

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Answer 14

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Answer 15

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The past growth rate in the earnings. Cost of Equity : It is the cost of the company while raising finance by issuing equity. It is earnings from the investment to the firm’s equity investors. It is the return to the stockholder holders’ equity investments.

Solution Summary: The author calculates the past growth rate in the earnings, the cost of equity, and the return to stockholder holders' equity investments.

Videos

To calculate: The past growth rate in the earnings.

Cost of Equity:

It is the cost of the company while raising finance by issuing equity. It is earnings from the investment to the firm’s equity investors. It is the return to the stockholder holders’ equity investments.

To calculate: The next expected dividend D1, assuming the past growth rate continues.

Want to see the full answer?

Chapter 10 Solutions

The past growth rate in the earnings. Cost of Equity : It is the cost of the company while raising finance by issuing equity. It is earnings from the investment to the firm’s equity investors. It is the return to the stockholder holders’ equity investments.

Solution Summary: The author calculates the past growth rate in the earnings, the cost of equity, and the return to stockholder holders' equity investments.

Videos

To calculate: The past growth rate in the earnings. Cost of Equity: It is the cost of the company while raising finance by issuing equity. It is earnings from the investment to the firm’s equity investors. It is the return to the stockholder holders’ equity investments.

To calculate: The next expected dividend D1, assuming the past growth rate continues.

Want to see the full answer?

Chapter 10 Solutions

To calculate: The past growth rate in the earnings.

Cost of Equity:

It is the cost of the company while raising finance by issuing equity. It is earnings from the investment to the firm’s equity investors. It is the return to the stockholder holders’ equity investments.