eBookProblem Walk-ThroughBanyan Co.'s common stock currently sells for $57.75 per share. The growth rate is a constant 4%, and the company has an expected dividend yield of 5%. Theexpected long-run dividend payout ratio is 50%, and the expected return on equity (ROE) is 8.0%. New stock can be sold to the public at the current price, but aflotation cost of 10% would be incurred. What would be the cost of new equity? Do not round intermediate calculations. Round your answer to two decimal places.%

Dividend Yield = 5%P0 = Stock Price =$57.75D Is $2.8875Flotation Cost = 10% Of Stock Price Flotation…

Answered: Banyan Co.'s common stock currently…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter12: The Cost Of Capital

Section: Chapter Questions

Problem 5P

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Give typing answer with explanation and conclusion Banyan Co.’s common stock currently sells for $56.75 per share. The growth rate is a constant 7%, and the company has an expected dividend yield of 2%. The expected long-run dividend payout ratio is 30%, and the expected return on equity (ROE) is 10.0%. New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. What would be the cost of new equity? Do not round intermediate calculations. Round your answer to two decimal places.
eBook Banyan Co.'s common stock currently sells for $43.50 per share. The growth rate is a constant 6%, and the company has an expected dividend yield of 6%. The expected long-run dividend payout ratio is 30%, and the expected return on equity (ROE) is 6%. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. Wwhat would be the cost of new equity? Do not round intermediate calculations. Round your answer to two decimal places. %
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