Given the following, compute the cost of externally generated equity (new equity) using the DCF approach:
The par value of the firms outstanding 20 year 8% annual coupon debt is 1,000 and the debt currently has a market value of 800.
The firm's tax rate is 30%.
The current dividend (just paid) is 2.00.
The dividend growth rate is 3%.
The current stock price is 20.00.
New equity flotation costs are 10%.
The risk free rate is 4%.
The market risk premium (Market return - Risk free rate) is 6%.
The security beta is 2.
Answers: 3
Another question on Business
Business, 21.06.2019 23:20
On october 2, 2016 starbucks corporation reported, on its form 10-k, the following (in millions): total assets $14,329.5 total stockholders' equity 5,890.7 total current liabilities 4,546.9 what did starbucks report as total liabilities on october 2, 2016? select one: a. $12,516.7 million b. $6,377.3 million c. $995.0 million d. $8,438.8 million e. none of the above
Answers: 2
Business, 22.06.2019 23:00
If the reserve requirement is 10 percent, what amount of excess reserves does a bank acquire when a business deposits a $500 check drawn on another bank?
Answers: 2
Business, 23.06.2019 02:30
Astudent finds data on an internet site that contains financial information about selected companies. he plans to analyze the data and use the results to develop a stock investment strategy. what kind of data source is he using? what concerns might you have about drawing conclusions from this data set?
Answers: 1
Business, 23.06.2019 03:20
You have just made your first $5,500 contribution to your retirement account. assume you earn a return of 10 percent per year and make no additional contributions. a. what will your account be worth when you retire in 45 years? (do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. what if you wait 10 years before contributing?
Answers: 1
You know the right answer?
Given the following, compute the cost of externally generated equity (new equity) using the DCF appr...
Questions
Chemistry, 10.07.2019 14:30
English, 10.07.2019 14:30
Mathematics, 10.07.2019 14:30
Mathematics, 10.07.2019 14:30
History, 10.07.2019 14:30
Mathematics, 10.07.2019 14:30
Mathematics, 10.07.2019 14:30
History, 10.07.2019 14:30
Mathematics, 10.07.2019 14:30
Health, 10.07.2019 14:30
History, 10.07.2019 14:30
History, 10.07.2019 14:30
Geography, 10.07.2019 14:30
Mathematics, 10.07.2019 14:30
