Dickerson Corporation's common stock is currently selling for $38. Last year's dividend was $4.00 per share
Investors expect dividends to grow at an annual rate of 7 percent indefinitely.
Flotation costs of 4% will be
incurred when new stock is sold.
a. What is the cost of internal common equity?
b. What is the cost of new common equity?
a. D1 = $4.00 × 1.07 = $4.28
Cost of internal common equity = $4.28/$38 + .07 = 18.26%
b. Cost of new common equity = $4.28/($38 × .
You might also like to view...
With respect to positioning, explain points-of-parity and points-of-difference
What will be an ideal response?
Generally, internal controls are implemented in a corporation to help prevent which element of the fraud triangle?
a. Perceived opportunity b. Perceived pressure c. Rationalization d. Authorization
Outstanding checks, deposits in transit, deductions for bank fees, additions for interest, and errors are all factors that can cause the bank statement balance for a checking account to be different from the company's checking account balance.
Answer the following statement true (T) or false (F)
The F-test partitions total variance into ____________________ variance and ____________________ variance.
Fill in the blank(s) with the appropriate word(s).