FOUND.OF FINANCIAL MANAGEMENT-ACCESS
FOUND.OF FINANCIAL MANAGEMENT-ACCESS
17th Edition
ISBN: 9781260519969
Author: BLOCK
Publisher: MCG
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Chapter 11, Problem 16P

Murray Motor Company wants you to calculate its cost of common stock. During the next 12 months, the company expects to pay dividends D 1 of $2 .50 per share, and the current price of its common stock is $50 per share. The expected growth rate is 8 percent.

a. Compute the cost of retained earnings K e . Use Formula 11-5.

b. If a $3 flotation cost is involved, compute the cost of new common stock K n . Use Formula 11-6.

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Chapter 11 Solutions

FOUND.OF FINANCIAL MANAGEMENT-ACCESS

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