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Author Question: Grunewald Co.s common stock currently sells for $70 per share, the company expects to earn $4 per ... (Read 80 times)

Adc3669

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Question 1

For a typical firm, which sequence is correct? All rates are after taxes, and assume the firm operates at its target capital structure.

WACC > rd> re> rs


rd< WACC < rs< re


WACC < rs< re< rd


rd< rs< re< WACC



Question 2

Grunewald Co.’s common stock currently sells for $70 per share, the company expects to earn $4 per share during the current year, its expected payout ratio is 50%, and its expected constant growth rate is 8%. New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. By how much would the cost of new stock exceed the cost of retained earnings?

0.25%


0.31%


0.38%


0.45%



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Marked as best answer by Adc3669 on Aug 7, 2023

LynellDool

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    • i thought about discounts
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Adc3669

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Reply 2 on: Aug 7, 2023
Excellent


ebonylittles

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Reply 3 on: Yesterday
Gracias!

 

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