Weaver Chocolate Co

question 94

Multiple Choice

Weaver Chocolate Co.expects to earn $3.50 per share during the current year,its expected dividend payout ratio is 65%,its expected constant dividend growth rate is 6.0%,and its common stock currently sells for $30.00 per share.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? Do not round your intermediate calculations.

• A) 13.98%
• B) 16.36%
• C) 13.70%
• D) 11.33%
• E) 11.47%

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Definitions:

Shrinkage

The loss of inventory that can occur due to theft, damage, or error, representing a discrepancy between recorded stock and actual physical inventory.

Serial Wardrobers

Individuals who frequently buy new clothing items, only to wear them a few times before replacing them with newer purchases.

Consumerism

The societal trend in which the buying and consumption of goods and services is considered a social and economic necessity.

Survey Research

A research method involving the collection of information from a sample of individuals through their responses to questions, used widely in social science, marketing, and public opinion research.