Please provide solutions. Thank you. 1. A firm has common stock with a prevailing market price of P100 per share. New issue of stock is expected to be sold for P98, with P2 per share representing the under-pricing necessary in the competitive capital market. Flotation costs are expected to total P1 per share. The dividends paid on the outstanding stock over the past five years are as follows: Year Dividend 1 P4.00 2 4.28 3 4.58 4 4.90 5 5.24 The cost of the firm’s new common stock equity is
Please provide solutions. Thank you.
1. A firm has common stock with a prevailing market price of P100 per share. New issue of stock is expected to be sold for P98, with P2 per share representing the under-pricing necessary in the competitive capital market. Flotation costs are expected to total P1 per share. The dividends paid on the outstanding stock over the past five years are as follows:
Year Dividend
1 P4.00
2 4.28
3 4.58
4 4.90
5 5.24
The cost of the firm’s new common stock equity is?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
