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Murrr4er [49]
2 years ago
15

A firm wishes to issue new shares of its stock, which already trades in the market. The current stock price is $24, the most rec

ent dividend was $3 per share, and the dividend is expected to grow at a rate of 4% forever. Flotation costs for this issue are expected to be 6%. What is the required rate of return (or financing cost) in this new issue?
Business
1 answer:
bekas [8.4K]2 years ago
8 0

Answer:

17.83%

Explanation:

The computation of required rate of return is shown below:-

Required rate of return = ((Expected dividend ÷ (Current Stock price × (1 - Flotation cost as a percentage of issue price)) + Growth rate)) × 100

= ((Dividend × (1 + Growth rate)) ÷ Current Price of stock × (1 - Flotation cost as a percentage of issue price)) + Growth rate))) × 100

= ($3 × (1.04) ÷ $24 × (1 - 0.06) + 0.04) × 100

= ($3.12 ÷ $22.56 + 0.04) × 100

= (0.138297872  + 0.04) × 100

= 17.82978723

or

= 17.83%

Therefore we have applied the above formula.

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Answer:

c. (1) (3), (5

Explanation:

Based on the information if she is trying to make decision on which one of two job offers she will accept the items that are IRRELEVANT or not important to her decision will be the BASIC SALARY, MOVING ALLOWANCE and INCURRED JOB SEARCH COSTS reason been that what is most relevant to her is how she will choose the best job among the two job offers she has at hand .

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2 years ago
Suppose that a chicken farm uses a nearby stream to dispose of the wastes released by its chickens. These wastes flow downstream
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3 years ago
After researching the competitors of EJH​ Enterprises, you determine that most comparable firms have the following valuation​ ra
Vera_Pavlovna [14]

Answer:

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2 years ago
A flood damaged several vans belonging to a nongovernmental, not-for-profit organization. A professional mechanic repaired the v
Westkost [7]

Answer:

b. As both an increase in the equipment account and an increase in contributions from donated services.

Explanation:

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There is no expense recorded as the services were performed for free.

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Julie has just retired. Her company's retirement program has two options as to how retirement benefits can be received. Under th
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First option will be recommended.

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As net present value of the first option is higher than the second option, first option will be recommended.

8 0
3 years ago
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