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linda_us
linda_us, Master's Degree
Category: Business and Finance Homework
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Experience:  A tutor for Business, Finance, Accounts and other related topics.
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a new common stock issue paid a $1.77 dividend last year. The

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a new common stock issue paid a $1.77 dividend last year. The firms dividends are expected to continue to grow at 6.9% per year forever. The price of the firms commonstock is now $27.01. What is the cost of capital from common equity


Cost of Equity Capital = D0*(1+g)/Price + g = (1.77*(1.069)/27.01) + .069 = 13.905%


You can request me by writing "FOR LINDA" at start of your post.

Regards

Linda
Customer: replied 4 years ago.


Okay I have another


a preffered stock i spaying 8.1% dividend on $100 par value. The cost of the preferred stock is ?%

Cost of Preferred stock is 8.1%

(If information about price is given then let me know)
Customer: replied 4 years ago.

Okay Here is the final one. A bond selling to yeid 12.2% where the frims tax rate is 34%. The cost of capital from this bond debt is?%


 


For linda


Cost of Bond = 12.2*(1-.34)=8.052%

You can request me by writing "FOR LINDA" at start of your post.

Regards

Linda
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