A private firm is going to raise money for internal improvements of its. production facilities through...
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A private firm is going to raise money for internal improvements of its. production facilities through putting the firm on the share market. i.c. "going public." Seven million dollars in stocks will be issued in $20 shares. Each share will receive an estimated 80 cents in dividends per year. The improvements will return 18 percent per year over the facility economic life. According to the circumstances, what is the financial cost of capital, and what is the opportunity cost? [2 mark] A private firm is going to raise money for internal improvements of its. production facilities through putting the firm on the share market. i.c. "going public." Seven million dollars in stocks will be issued in $20 shares. Each share will receive an estimated 80 cents in dividends per year. The improvements will return 18 percent per year over the facility economic life. According to the circumstances, what is the financial cost of capital, and what is the opportunity cost? [2 mark]
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