You were recently hired by Garrett Design, Inc. to estimate its cost of common equity. You obtained the following data: the expected dividend is $1.75; current stock price= $42.50; growth rate is 7.00%. Flotation costs amount to 5.00% of the selling price. What is the cost of equity raised by selling new common stock? 10.77% 11.33% 12.50% O 11.90% 13.12%
You were recently hired by Garrett Design, Inc. to estimate its cost of common equity. You obtained the following data: the expected dividend is $1.75; current stock price= $42.50; growth rate is 7.00%. Flotation costs amount to 5.00% of the selling price. What is the cost of equity raised by selling new common stock? 10.77% 11.33% 12.50% O 11.90% 13.12%
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter11: Determining The Cost Of Capital
Section: Chapter Questions
Problem 5MC
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