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Issuing new common stock at a market price

Salte Corporation is issuing new common stock at a market price of $27.

Dividends last year were $1.45 and are expected to grow at an annual rate of 6 percent forever. Flotation costs will be 6 percent of market price. What is Salte's cost of equity?

kncs D^1/Np0= + g
kncs = 1.45(1+0.06)/27(1-0.06)+ 0.06 = .1206 = 12.06%

How do I set this up in Excel?

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Finance Basics: Issuing new common stock at a market price

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Issuing new common stock at a market price

Reference No:- TGS01450963

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

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Solution Preview :

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Finance Basics: Issuing new common stock at a market price

Reference No:- TGS01450963

Recent Questions Asked Finance Basics

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