LePage CoExpects to Earn $2

question 71

Multiple Choice

LePage Co.expects to earn $2.50 per share during the current year,its expected payout ratio is 55%,its expected constant dividend growth rate is 6.0%,and its common stock currently sells for $22.50 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?

• A)11.81%
• B)12.43%
• C)13.05%
• D)14.39%

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Definitions:

Continued Relevance

The ongoing importance or applicability of an idea, theory, or knowledge in the face of changing contexts or over time.

George Simmel

A German sociologist, philosopher, and critic known for his work on the philosophy of money, social structure theory, and the study of metropolitan life.

Conspicuous Consumption

The purchase of goods or services for the purpose of displaying one's wealth or social status, rather than for practical necessity.

Patriarchy

A societal structure where males predominantly possess the main authority, dominate political leadership positions, have the upper hand in moral guidance, enjoy societal advantages, and control property rights.