Regis Corporation needs to raise $24,000,000 in order to buy a new cruiser for new sight-seeing...
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Regis Corporation needs to raise $24,000,000 in order to buy a new cruiser for new sight-seeing business. Their target capital structure calls for a debt ratio of 50%. Therefore, $12 million needs to be financed from equity from the sources, which is $3,500,000 Retained earnings, $4,800,000 New Common Stock and $3,700,000 Preferred Stock. The following details the financial data for both the common stock and preferred stock options: Market Price Annual Cash Dividend Annual Cash Dividend Growth Rate Issue Price Flotation Costs Common Stock Preferred Stock $35 $6 (EOY 1) 8% $50 10% $30 $4 $65 8% (Market Price) Calculate the cost of equity required to finance the new process unit. Regis Corporation needs to raise $24,000,000 in order to buy a new cruiser for new sight-seeing business. Their target capital structure calls for a debt ratio of 50%. Therefore, $12 million needs to be financed from equity from the sources, which is $3,500,000 Retained earnings, $4,800,000 New Common Stock and $3,700,000 Preferred Stock. The following details the financial data for both the common stock and preferred stock options: Market Price Annual Cash Dividend Annual Cash Dividend Growth Rate Issue Price Flotation Costs Common Stock Preferred Stock $35 $6 (EOY 1) 8% $50 10% $30 $4 $65 8% (Market Price) Calculate the cost of equity required to finance the new process unit.
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Related Book For
Fundamentals of Financial Management
ISBN: 978-0324664553
Concise 6th Edition
Authors: Eugene F. Brigham, Joel F. Houston
Posted Date:
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