The estimated cost of the long-term investment project is P50 million. The expected dividend on ordinary share is P8 per share. The par value of the ordinary share is P100, but it is currently selling in the market at P145 per share. Required: Compute the cost of ordinary share. LIOD E O 003

The estimated cost of the long-term investment project is P50 million. The expected dividend on ordinary share is P8 per share. The par value of the ordinary share is P100, but it is currently selling in the market at P145 per share. Required: Compute the cost of ordinary share. LIOD E O 003

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 12P

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Question

Task 7.
YVONE Company considers issuing ordinary shares solely to finance the funding requirements of its
long-term investment project. For the past several years the company has experienced a dividend
growth rate of 3%.
The estimated cost of the long-term investment project is P50 million. The expected dividend on
ordinary share is P8 per share. The par value of the ordinary share is P100, but it is currently selling
in the market at P145 per share.
Required: Compute the cost of ordinary share.
HSD-FO-003

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