The ____ team is responsible for working with the remainder of the organization to assist in the recovery of nontechnology funct
1 answer:
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Answer:
Cost of internal equity =21%
Cost of external Equity =23.29%
Explanation:
Using the constant growth model:
if ke is made subject of formula then the cost of internal equity ke is calculated as follows:
=
= 21%
If external equity is to be used, that means that the company will have to issue share to get a fresh infection of capital into the company, and is thus likely to face flotation costs. the company will receive a net of $20 minus flotation costs for every share sold.
If ke is made subject of formula then the cost of external equity ke is calculated as follows:
=
= 23.29%