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Pani-rosa [81]
3 years ago
8

You are a finance intern at Chambers and Sons and they have asked you to help estimate the company's cost of common equity. You

obtained the following data: D1 = $1.25; P0 = $27.50; gL = 5.00% (constant); and F = 6.00%. What is the cost of equity raised by selling new common stock?
Business
1 answer:
koban [17]3 years ago
4 0

D1 = $ 1.25

P0 = $ 27.50

g = 5 % = 0.05

F = 6 % = 0.06

Cost of equity, re = D1/ {P0 x (1- F)} + g

                             = $ 1.25 / {$ 27.50 x (1- 0.06)} + 0.05

                             = $ 1.25 / ($ 27.50 x 0.94) + 0.05

                             = $ 1.25 / 25.85 + 0.05

                           = 0.048356 + 0.05

                           = 0.098356 or 9.84 %

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Answer:

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Explanation:

given data

accumulated =  $12.5 trillion

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solution

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Is it reasonable to assume that treasury bonds will provide higher returns in recessions than in booms?
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3 0
2 years ago
Assume Sarah is a cash-method, calendar-year taxpayer, and she is considering making the following cash payments related to her
Marizza181 [45]

The question is incomplete. However, it is about the calculation of after-tax cost of payment

Answer:

After-tax cost = payment*(1-0.37)

Explanation:

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7 0
3 years ago
Your uncle is about to retire, and he wants to buy an annuity that will provide him with $75,000 of income a year for 20 years,
Nataly_w [17]

Answer:

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Explanation:

Giving the following information:

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n= 20

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FV= {A*[(1+i)^n-1]}/i + {[A*(1+i)^n]-A}

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3 years ago
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