Cost of Equity - new common stock

Related BrainMass Solutions

• Cost of equity and WACC

  When new stock is issued, the flotation cost reduces the amount received by the issuer and so the cost of equity is given as Cost of new common stock = D1/(P0-F) + g F = flotation cost = 30X10%=$3 Cost of new common stock = 3/(30-3) + 5% = 16.1%

• Cost of capital

  Use the DCF method to find the cost of common equity. b. Now calculate the cost of common equity from retained earnings using the CAPM method. c. What is the cost of new common stock, based on CAPM?

• CAPM, DCF, cost of preferred stock and new common stock

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  What is the cost of equity raised by selling new common stock?

• LePage Co.

  309526 What would be the cost of equity from new common stock? 1.

• Expansion Funds in the form of Equity: WACC

  of common stock X cost of common stock WACC = 0.15 X 8% X (1-0.34) + 0.33 X 9.4% + 0.52 X 12.5% WACC = 10.42% In this solution, we show how to calculate the percent of the new expansion funds that must be in the form of equity, and the weighted average

• Cost of equity / WACC

  If Bryon issues new common stock, a 20% flotation cost will be incurred. The firm's marginal tax rate is 40%. a.What is the component cost of the equity raised by selling new common stock?

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• Finest Products, Inc- WACC

  of debt + weightage of common stock x cost of common stock + weightage of preferred stock x cost of preferred stock Weightage After tax cost Weightage x Cost Debt: 30.00% 8.00% 2.40% =30.%*8.% Common stock 60.00%