CFIN
5th Edition
ISBN: 9781305661639
Author: Scott Besley, Eugene Brigham
Publisher: Cengage Learning
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Chapter 11, Problem 9PROB
Summary Introduction
Cost of
Cost incurred by the company by using retained earnings, instead of declaring dividend to common stock holders.
Calculate the cost of retained earnings as follows:
Cost of new common stock is the cost incurred by the company for issue new common stock.
Calculate the cost new common stock as follows:
CE has current price is $50 and expected dividend of $6. Flotation cost for issuing the new common stock is 7%.
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Dividend disocunt model (DDM); Author: Edspira;https://www.youtube.com/watch?v=TlH3_iOHX3s;License: Standard YouTube License, CC-BY