Answer:
Floating cost adjustment is 3.25%
Explanation:
Flotation-adjusted cost of equity = (Expected dividend at the end of Year 1 / Net proceeds per share) + Growth rate.
Expected dividend at the end of Year 1 (D1) = $ 2.30 (given in question)
Net proceeds per share = (21.30 - 4 % of 21.30) = $ 20.448
Flotation-adjusted cost of equity = (2.30 / 20.448) + 0.04
= 0.1125 + 0.04
= 0.1525 i.e., 15.25 %.
Flotation cost adjustment = Flotation-adjusted cost of equity - Cost of equity without flotation adjustment.
= 15.25 % - 12 % (given in question)
= 3.25 %.
Conclusion:- Flotation cost adjustment = 3.25 %
Answer:
D they both will increase
Explanation:
Goodluck on that.
Answer:
Hazel will have to pay Jill $750 for his remaining life because Hazel had received something which is very expensive in return in compensation of his lifetime monthly payments of $750 to Jill. So this means that the 100% contract is enforceable.
The contract formation can be proved in the court because when Hazel will say that the contract is not written so according to Statute of Fraud he is not liable to pay Jill. This means he is agreeing at the point that the contract was in place.
