View the step-by-step solution to:

10- 2 COST OF PREFERRED STOCK Tunney Industries can issue perpetual preferred stock at a price of $ 47.50 a share. The stock would pay a constant...

10- 2 COST OF PREFERRED STOCK
Tunney Industries can issue perpetual preferred stock at a price of $ 47.50 a share. The stock would pay a constant annual dividend of $ 3.80 a share. What is the company's cost of preferred stock, rp?
10- 4 COST OF EQUITY WITH AND WITHOUT FLOTATION
Javits & Sons' common stock currently trades at $ 30.00 a share. It is expected to pay an annual dividend of $ 3.00 a share at the end of the year ( D1 =$ 3.00), and the constant growth rate is 5% a year.
a. What is the company's cost of common equity if all of its equity comes from retained earnings?
b. If the company issued new stock, it would incur a 10% flotation cost. What would be the cost of equity from new stock?
10- 7 COST OF COMMON EQUITY WITH AND WITHOUT FLOTATION
The Evanec Company's next expected dividend, D1, is $ 3.18; its growth rate is 6%; and its common stock now sells for $ 36.00. New stock ( external equity) can be sold to net $ 32.40 per share.
a. What is Evanec's cost of retained earnings, rs?
b. What is Evanec's percentage flotation cost, F?
c. What is Evanec's cost of new common stock, re?
10- 8 COST OF COMMON EQUITY AND WACC
Patton Paints Corporation has a target capital structure of 40% debt and 60% common equity, with no preferred stock. It's before- tax cost of debt is 12%, and its marginal tax rate is 40%. The current stock price is P0 = $ 22.50. The last dividend was D0 = $ 2.00, and it is expected to grow at a 7% constant rate. What is its cost of common equity and it's WACC?

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question