Builtrite is planning on offering a $1000 par value, 20 year, 6% coupon bond with an expected selling price of $1025. floatation costs would be $55 per bond.

Preferred Stock: Builtrite could sell a $46 par value preferred with an 6% coupon for $38 a share. Flotation costs would be $2 a share.

Common Stock: Currently, the stock is selling for $62 a share and has paid a $2.82 dividend. Dividends are expected to continue growing at 11%. flotation costs would be $3.75 a share and Builtrite has $350,000 in available retained earnings. Assume a 25% tax bracket.

What is their after-tax cost of a new common?

Answer rating: 100% (QA)

We need to find the Gordon Growth model Using this formula rcommon D01g P0 g Wh... View the full answer