Cost of External Equity (New Common Stock Issuances) Common stock is currently selling for $39.00...
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Accounting
Cost of External Equity (New Common Stock Issuances)
Common stock is currently selling for $39.00 per share. Stock expects to pay a current dividend of $1.60 per share and earnings and dividends are expected to grow at 7.00% rate. The issuance costs on this stock are $2.00 per share.
(financed with blend of 40.00% debt, 30.00% new retained earnings as internal earnings and 30.00% external equity for new common stock issuances)
Showing formula values and calculations, please, so I can learn how to plug in the figures for future work!
P0:
Pnet:
D0
D1
g
Kne (the cost of new equity or the cost of external equity) =
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