Author Question: Your employer pays a $1.20 dividend on its preferred shares. If the price of its preferred shares is ... (Read 44 times)

jany123 · **on:** Aug 7, 2023

Question 1

You were recently hired by Nast Media Inc. to estimate its cost of capital. You were provided with the following data: D₁= $3.00; P₀= $57.00; g = 7.00% (constant); and F = 6.00%. What is the cost of equity raised by selling new common stock?

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12.60%

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12.93%

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13.04%

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13.52%

Question 2

Your employer pays a $1.20 dividend on its preferred shares. If the price of its preferred shares is $27 and flotation costs would be $0.60 per share, what is the required rate of return on the firm’s preferred shares?

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4.08%

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4.55%

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5.00%

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5.61%

3ginamay · **Reply #1 on:** Aug 7, 2023

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