Your Company's Stock Sells for $50 Per Share,its Last Dividend

question 4

Multiple Choice

Your company's stock sells for $50 per share,its last dividend (D₀) was $2.00,its growth rate is a constant 5 percent,and the company would incur a flotation cost of 15 percent if it sold new common stock.Net income for the coming year is expected to be $500,000,the firm's payout ratio is 60 percent,and its common equity ratio is 30 percent.If the firm has a capital budget of $1,000,000,what component cost of common equity will be built into the WACC for the last dollar of capital the company raises?

• A) 9.20%
• B) 9.94%
• C) 10.50%
• D) 11.75%
• E) 12.30%

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A treatment or therapy that has been scientifically tested and proven to be effective.

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A way of gaining knowledge by means of direct and indirect observation or experience, often involving systematically collected data through experimentation and observation.

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