Keystone Corporation will issue new common stock to finance an expansion. The existing common
stock just paid a $1.50 dividend, and dividends are expected to grow at a constant rate 8%
indefinitely.
The stock sells for $45, and flotation expenses of 5% of the selling price will be incurred
on new shares. What is the cost of new common stock be for Keystone Corp?
A) 11.33% B) 12.53% C) 11.60% D) 11.79% E) 11.51%
D
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The "customer is king" category of buyer-seller relationship is relatively simple, and one in which routine exchanges with moderately high levels of cooperation and information exchange occur
Indicate whether the statement is true or false
In more complicated financing arrangements, firms sell batches of receivables to a legally separate entity whose sole purpose is to hold the receivables and issue claims on their cash flows. The entity holding the receivables issues securities to investors in return for cash and transfers the cash to the transferor in payment for the receivables. The investors in securities issued by the entity
receive payments out of the cash flow from the transferred receivables. Common terminology refers to such an entity as a a. special purpose entity. b. pass-through entity. c. tax shelter. d. subsidiary entity. e. securitized entity.
Agency requests regarding recordkeeping and reporting are not subject to federal or
state privileges against self-incrimination. a. True b. False
Which of the following is NOT a way to measure forecasting errors?
a. mean squared error (MSE) b. mean absolute deviation (MAD) c. mean absolute percentage error (MAPE) d. error sum of squares (SSE)