Refer to Problem 15 7, and suppose that Mobil wants to raise capital to finance a new project by issuing new common stock With the new project, the cash dividend is expected to be $1 10 at the end of the current year, and its growth rate is 10 The stock now sells for $18, but new common stock can b...

Refer to Problem 15.7, and suppose that Mobil wants to raise capital to finance a new project

Question:

Refer to Problem 15.7, and suppose that Mobil wants to raise capital to finance a new project by issuing new common stock. With the new project, the cash is expected to be $1.10 at the end of the current year, and its growth rate is 10%. The stock now sells for $18, but new can be sold to net Mobil $15 per share.
(a) What is Mobil's flotation cost, expressed as a percentage?
(b) What is Mobil's cost of new (ke)?
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... 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...