The Evanec Company’s next expected dividend, D1, is $3.18; its growth rate is 6%; and its common stock now sells for $36.00. New stock (external equity) can be sold to net $32.40 per share. a. What is Evanec’s cost of retained earnings, rs? b. What is Evanec’s percentage flotation cost, F? c. What is Evanec’s cost of new common stock, re?
The Evanec Company’s next expected dividend, D1, is $3.18; its growth rate is 6%; and its common stock now sells for $36.00. New stock (external equity) can be sold to net $32.40 per share. a. What is Evanec’s cost of retained earnings, rs? b. What is Evanec’s percentage flotation cost, F? c. What is Evanec’s cost of new common stock, re?
Chapter9: The Cost Of Capital
Section: Chapter Questions
Problem 5P
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The Evanec Company’s next expected dividend, D1, is $3.18; its growth rate is 6%; and its common stock now sells for $36.00. New stock (external equity) can be sold to net $32.40 per share.
a. What is Evanec’s cost of
b. What is Evanec’s percentage flotation cost, F?
c. What is Evanec’s cost of new common stock, re?
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