COST OF COMMON EQUITY WITH FLOTATION Ballack Co.’s common stock currently sells for $46 75 per share. The growth rate is a constant 12%, and the company has an expected dividend yield of 5%. The expected long-run dividend payout ratio is 25%, and the expected return on equity (ROE) is 16%. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of new equity?
Fundamentals of Financial Manageme...
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COST OF COMMON EQUITY WITH FLOTATION Ballack Co.’s common stock currently sells for $46 75 per share. The growth rate is a constant 12%, and the company has an expected dividend yield of 5%. The expected long-run dividend payout ratio is 25%, and the expected return on equity (ROE) is 16%. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of new equity?
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