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user100 [1]
3 years ago
10

White Lion Homebuilders has a current stock price of $22.35 per share, and is expected to pay a per-share dividend of $2.03 at t

he end of the year. The company’s earnings’ and dividends’ growth rate are expected to grow at the constant rate of 9.40% into the foreseeable future. If White Lion expects to incur flotation costs of 3.750% of the value of its newly-raised equity funds, then the flotation-adjusted (net) cost of its new common stock (rounded to two decimal places) should be .
Business
1 answer:
oee [108]3 years ago
6 0

Answer:

18.84%

Explanation:

the flotation adjusted cost of new common stock = [expected dividend / (net proceeds from stock issuance)] + expected growth rate

  • expected dividend = $2.03
  • net proceeds from stock issuance = $22.35 x (1 - flotation costs) = $22.35 x 0.9625 = $21.5119
  • expected growth rate = 9.4%

the flotation adjusted cost of new common stock = [$2.03 / $21.5119] + 9.4% = 9.44% + 9.4% = 18.84%

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3 years ago
Chris has been offered a seven-year bond (face value $1,000) issued by Bayley Ltd at a price of $943.22. The bond has a coupon r
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As the actual price of such bonds should be $950.51 and the bonds are offered at a lower price, the bonds should be bought at the offered price.

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To determine whether the bonds should be bought at the given price or not, we first need to calculate the price of the bond. The formula for the price of the bond is attached.

The interest payed by the bonds can be treated as an annuity.

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As the actual price of such bonds should be $950.51 and they are offered at a lower price, the bonds should be bought at the offered price.

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3 years ago
Rebekkah loves the twilight series of movies. she owns every video and book about the series. she also starts her own website wh
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The answer is user-generated media!

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With regards to the sequence of steps in the team-building process which of the following is correct? Establishing a team missio
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