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Yuliya22 [10]
3 years ago
9

Asian Trading Company paid a dividend yesterday of $4 per share. The dividend is expected to grow at a constant rate of 7% per y

ear. The price of Asian Trading Company's stock today is $25 per share. If Asian Trading Company decides to issue new common stock, flotation costs will equal $3 per share. Asian Trading Company's marginal tax rate is 35%. Based on the above information, the cost of new common stock is
Business
1 answer:
zalisa [80]3 years ago
6 0

Answer:

$26.45

Explanation:

The computation of the cost of the new common stock is shown below:

Cost of the new common stock is

= Current year dividend ÷ (Price - flotation cost) + growth rate

where,

Current year dividend is

= $4 × 1.07

= $4.28

And, the price $25 and the flotation cost is $3

And, the growth rate is 7%

So the cost of new common stock is

= ($4.28) ÷ ($22) + 0.07

= $26.45

We simply applied the above formula

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Answer: a) It captures the full price that customers might be willing to pay for a product.

Explanation:

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2 years ago
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Answer:

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A bank reconciliation with the headings "Balance per Books" and "Balance per Bank" lists three adjustments under the former and
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Answer:

a. 3

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<h3>What is forecasting?</h3>

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In this case, qualitative forecasting is based on the information that cannot be measured while quantitative forecasting relies on historical data.

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