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The Evanec Company's next expected dividend, D1, is $3.05; its growth rate is 7%; and its...

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Finance

The Evanec Company's next expected dividend, D1, is$3.05; its growth rate is 7%; and its common stock now sells for$39.00. New stock (external equity) can be sold to net $31.20 pershare.

  1. What is Evanec's cost of retained earnings, rs? Donot round intermediate calculations. Round your answer to twodecimal places.

    rs = %

  2. What is Evanec's percentage flotation cost, F? Round your answerto two decimal places.

    F = %

  3. What is Evanec's cost of new common stock, re? Do notround intermediate calculations. Round your answer to two decimalplaces.

    re = %

Answer & Explanation Solved by verified expert
4.3 Ratings (567 Votes)
i Cost of retained earnings Re Price Existing stock D1 Re g Here D1 Expected dividend 305 Price Existing stock 39 Re Cost of retained earnings    See Answer
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The Evanec Company's next expected dividend, D1, is$3.05; its growth rate is 7%; and its common stock now sells for$39.00. New stock (external equity) can be sold to net $31.20 pershare.What is Evanec's cost of retained earnings, rs? Donot round intermediate calculations. Round your answer to twodecimal places.rs = %What is Evanec's percentage flotation cost, F? Round your answerto two decimal places.F = %What is Evanec's cost of new common stock, re? Do notround intermediate calculations. Round your answer to two decimalplaces.re = %

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