Cost of Common Stock Capital Ross Textiles wants to measure its cost of common stock capital.The company's
Question:
Cost of Common Stock Capital Ross Textiles wants to measure its cost of common stock capital. The company's shares are currently selling for $52.88. The company expects to pay a dividend of $3.34 at the end of the year (2016). Dividends for the last 5 years are shown in the following table.
Year Dividend
2015 $3.04
2014 2.68
2013 2.51
2012 2.12
2011 2.09
After undervaluation and flotation costs, the company expects to net $52 per share on a new issue. d. Using the constant growth valuation model, determine the cost of new common shares, rn.
A) The dividend growth rate from 2011 to 2015 is ____%
B) The net income, N that the frim will actually receive is $____
C) Using the constant growth valuation model, the cost of retained earnings RS is ____%
D) Using the constant growth valuation model, the cost of new RN common shares is ____%
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones