Gs Co. has insufficient retained earnings to fund capital expenditures and decided to issue new common shares. Gs Co.’s share currently has a price of P33 per share and has a projected year-end dividend of P6 per share. The dividend is expected to grow at 2% annually forever. The cost of new equity is determined at 22%. What is the floatation cost in peso?

Gs Co. has insufficient retained earnings to fund capital expenditures and decided to issue new common shares. Gs Co.’s share currently has a price of P33 per share and has a projected year-end dividend of P6 per share. The dividend is expected to grow at 2% annually forever. The cost of new equity is determined at 22%. What is the floatation cost in peso?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 2P

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