Trahern Baking Co

question 69

Multiple Choice

Trahern Baking Co.common stock sells for $32.50 per share.It expects to earn $3.50 per share during the current year, its expected dividend payout ratio is 65%, and its expected constant dividend growth rate is 6.0%.New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred.What would be the cost of equity from new common stock?

• A) 12.70%
• B) 13.37%
• C) 14.04%
• D) 14.74%
• E) 15.48%

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Definitions:

Minor Contracts

Agreements entered into by individuals under the age of legal majority, which are often voidable at the discretion of the minor.

Pre-Injury Waiver

A pre-injury waiver is a legal agreement where a participant in an activity agrees to waive their right to sue the provider for any injuries that might occur, effectively absolving the provider of liability.

Summary Judgment

A legal determination made by a court without a full trial, granted when one party's evidence clearly shows there is no factual dispute, thereby avoiding the need for a trial.

Intoxicated Parties

Individuals under the influence of alcohol or drugs, particularly in legal contexts where their capacity to consent or make decisions is questioned.