X Corp paid dividends to OS last year by 2.20 per share. The current market price of Ordinary Shares is 40 per share and investors expect that dividend to grow by 6% by next year. Cost to issue OS is 5% of market value. What is the cost of new common stock? a• 12.14% b• 11.79% c• 11.83% d• 11.50%
X Corp paid dividends to OS last year by 2.20 per share. The current market price of Ordinary Shares is 40 per share and investors expect that dividend to grow by 6% by next year. Cost to issue OS is 5% of market value. What is the cost of new common stock? a• 12.14% b• 11.79% c• 11.83% d• 11.50%
Chapter11: The Cost Of Capital
Section: Chapter Questions
Problem 9PROB
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X Corp paid dividends to OS last year by 2.20 per share. The current market price of Ordinary Shares is 40 per share and investors expect that dividend to grow by 6% by next year. Cost to issue OS is 5% of market value. What is the cost of new common stock?
a• 12.14%
b• 11.79%
c• 11.83%
d• 11.50%
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