Cost of equity the common stock for the bestsold


(Cost of equity) the common stock for the Bestsold Corporation sells for $57. If a new issue is sold, the flotation costs are estimated to be 9 percent. The company pays 70 percent of its earnings in dividends, and a $4.20 dividend was recently paid. Earnings per share 6 years ago were $4.00. Earnings are expected to continue to grow at the same annual rate in the future as during the past 6 years. The firm's marginal tax rate is 35 percent. Calculate the cost of (a) internal common equity and (b) external common equity. 

Request for Solution File

Ask an Expert for Answer!!
Finance Basics: Cost of equity the common stock for the bestsold
Reference No:- TGS01007563

Expected delivery within 24 Hours