Register now or log in to join your professional community.
your corporation expect to have operating income during the coming year of1000000 and it expect its earning and dividend to grow indefinitely at a constant rate12.5%. The firm has5000000 of debt outstanding at interest rate8% and it has100000 shares of common stock outstanding. the firm has paid50% of net earning as dividends. the current price of its common stock is $40 but it would incur a10% flotation cost if it were to sell new stock. The firm's tax rate is40%.
what is the firm's cost of retained earnings?
what is the firm's cost of newly issued stock?
what is the firm's cost of debt?
