Common Stock Price & IRR
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M Corporation's common stock is currently selling for $50 per share. The current dividend is $2 per share. If dividends are expected to grow at 6% per year and if the flotation costs are 10%, then what is the firm's cost of retained earnings and what is the cost of new common stock?
The capital budgeting director of SP Corporation is evaluating a project which costs $200,000, is expected to last for 10 years and produce after tax cash flows, including depreciation of $44,503 per year. If the firm's required rate of return is 14% and its tax rate is 40%, what is the project's IRR?
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Solution Summary
The solution determines what is the project's IRR in this case.
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