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IBM company's financial information is provided below: Current Stock Price: $30.00; Expected Annual Dividend...

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Finance

IBM company's financial information is provided below:

  • Current Stock Price: $30.00;
  • Expected Annual Dividend in 1-Year: $1.50
  • Constant Growth Rate of Earnings: 3.00%;
  • New Equity Flotation Cost: 7.00%

How much is IBMs cost of common equity if all of its equity comes from issuing new stocks?

Enter your answer in the following format: 0.1234;

Hint: Answer is between 0.0754 and 0.093

Answer & Explanation Solved by verified expert
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