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COST OF COMMON EQUITY WITH AND WITHOUT FLOTATION The Evanec Company’s next expected dividend, D 1 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, r s ? b. What is Evanec’s percentage flotation cost, F? c. c What is Evanec’s cost of new common stock, r e ?

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Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781285867977
BuyFind

Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781285867977

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Chapter
Section
Chapter 10, Problem 7P
Textbook Problem

COST OF COMMON EQUITY WITH AND WITHOUT FLOTATION 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.

  1. a. What is Evanec’s cost of retained earnings, rs?
  2. b. What is Evanec’s percentage flotation cost, F?
  3. c. c What is Evanec’s cost of new common stock, re?

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