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Author Question: Two considerations that cause a corporation's cost of capital to be different than its investors' ... (Read 28 times)

leo leo

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on: Jul 10, 2018
Two considerations that cause a corporation's cost of capital to be different than its investors'
  required returns are
 
  A) individual taxes and dividends.
  B) corporate taxes and flotation costs.
  C) corporate taxes and the earned income tax credit.
  D) individual taxes and corporate taxes.

Question 2

Due to growing demand for computer software, the Shine Company has had a very successful year and expects its earnings per share to grow by 25 percent to reach 5.50 for this year.
 
  Estimate the price of the company's common stock assuming the industry's price/earning ratio is 12.


ngr69

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Reply #1 on: Jul 10, 2018
Answer to Question 1

B

Answer to Question 2

Stock price = (P/E  E) = 12  5.50 = 66


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leo leo

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Reply #2 on: Jul 10, 2018
Thank you


ngr69

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Reply #3 on: Jul 10, 2018
No problemo


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