The Claustrophobic Solution, Inc., a residential window and door manufacturer, has the following historical record of earnings per share (EPS) from 2013 to 2017:
The company’s payout ratio has been 60% over the last five years and the last quoted price of the firm’s stock was $10. Flotation costs for new equity will be 7%. The company has 30,000,000 common shares outstanding and a debt-equity ratio of 0.50.
a) If dividends are expected to grow at the same arithmetic average growth rate of the last five years, what is the dividend payment in 2018?
b) Calculate the firm’s cost of retained earnings and the cost of new common equity using the constant growth dividend discount model.
c) Calculate the break-point associated with retained earnings.
d) If the Claustrophobic Solution’s after-tax cost of debt is 9%, what is the WACC with retained earnings? With new common equity?
e) Assuming that the cost of debt is constant, create a marginal cost of capital (MCC) schedule. Be sure to use a Scatter chart and make it a step function.
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A distinguishing characteristic of a proactive personality is that the individual
A) avoids organizational citizenship behavior. B) freely criticizes his or her boss. C) patterns his or her behavior after coworkers. D) brings about environmental change (on the job).
Articles of incorporation, prepared by a business that wishes to incorporate, normally include, but are not limited to, the corporation's name and purpose, its location, and provisions for capital stock.
Answer the following statement true (T) or false (F)