LePage Co expects to earn $2 50 per share during the current year, its expected payout ratio is 55 , its expected constant dividend growth rate is 6 0 , and its common stock currently sells for $22 50 per share New stock can be sold to the public at the current price, but a flotation cost of 5 woul...

b 1243 cost of new equity D1P0 1 f ...

LePage Co. expects to earn $2.50 per share during the current year, its expected payout ratio is

Question:

LePage Co. expects to earn $2.50 per share during the current year, its expected payout ratio is 55%, its expected constant growth rate is 6.0%, and its currently sells for $22.50 per share. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the from new common stock?
a) 13.05%
b) 12.43%
c) 11.81%
d) 14.39%
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Cost Of Equity
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...