The company's external equity comes from those funds raised from public issuance of shares or rights. The cost of external equity is the minimum rate of return which the shareholders supply new funds <span>by </span>purchasing<span> new shares to prevent the decline of the market value of the shares. To compute the cost of external equity, we should use this formula:</span>
Ke<span> = (DIV 1 / Po) + g</span>
Ke<span> = cost of external equity</span>
DIV 1 = dividend to be paid next year
Po = market price of share
g = growth rate
In the problem, the estimated dividend to be paid next year is $1.50. The market price is $18.50 and the growth rate is 4%.
<span>Substituting the given to the formulas, we need to divide $1.50 by $18.50 giving us the result of 8.11% plus the growth rate; this would yield to the result of 12.11% cost of external equity.</span>
Answer:
$7,200
Explanation:
The calculation of income that should be presented in the income statement is shown below:-
Dividend Received = Given percentage × Paid dividend
= 12% × $60,000
= $7,200
Therefore for computing the income that should be presented in the income statement we simply applied the above formula.
Therefore the above is the answer
Answer:
A. the 10thhour of study will likely be less productive than the 3rd.
Explanation:
The law of diminishing returns is a point at which the level of benefits or apprehensions gained is less than the amount of energy or time that is invested.
So at the tenth hour, this law would be setting in, and the effectiveness of each additional unit of time decreases. So this hour will be less productive than the third hour.
