Solved: Zycor corporation obtains most of its funding internally, Finance Basics

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Zycor corporation obtains most of its funding internally

Question: Zycor Corporation obtains most of its funding internally. Assume that the stock has a beta of 1.2, the riskless rate is 6.5% and the market risk premium is 6%.

a. Estimate the cost of internal equity.

b. Now assume that the cost of issuing new stock is 5% of the proceeds. Estimate the cost of external equity.

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Finance Basics: Zycor corporation obtains most of its funding internally

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Finance Basics: Zycor corporation obtains most of its funding internally

Reference No:- TGS02485470

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