A company has just paid a dividend of $2 per share on its common stock (D 0
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Question:
A company has just paid a dividend of $2 per share on its common stock (D0=$2.00). The dividend is expected to grow at a constant rate of 7 percent per year. The stock is currently selling for $42 per share. If the company issues additional shares, it must pay its investment banker a float cost of $1 per share.
What is the cost of external capital?
Related Book For
Financial Management Theory and Practice
ISBN: 978-1305632295
15th edition
Authors: Eugene F. Brigham, Michael C. Ehrhardt
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