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Author Question: LePage Co. expects to earn $2.90 per share during the current year, its expected payout ratio is ... (Read 34 times)

mt05945

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Question 1

Kovach Lumber Company hired you to help estimate its cost of capital. You were provided with the following data: D1= $1.30; P0= $28.90; g = 7% (constant); and F = 6%. What is the cost of equity raised by selling new common stock?

10.41%


10.80%


11.21%


11.79%



Question 2

LePage Co. expects to earn $2.90 per share during the current year, its expected payout ratio is 60%, its expected constant dividend growth rate is 5%, and its common stock currently sells for $24 per share. New stock can be sold to the public at the current price, but a flotation cost of 6% would be incurred. What would be the cost of equity from new common stock?

11.81%


12.04%


12.35%


12.71%



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Marked as best answer by mt05945 on Aug 7, 2023

leilani49

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mt05945

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Reply 2 on: Aug 7, 2023
Gracias!


lindahyatt42

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Reply 3 on: Yesterday
Excellent

 

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