question archive Ellington Electronics wants you to calculate its cost of common stock
Ellington Electronics wants you to calculate its cost of common stock
Subject:FinancePrice: Bought3
Ellington Electronics wants you to calculate its cost of common stock. During the next 12 months, the company expects to pay dividends (D1) of $2.00 per share, and the current price of its common stock is $40 per share. The expected growth rate is 3 percent. (Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. Compute the cost of retained earnings (Ke). Cost of retained earnings 8 % b. If a $3.0 flotation cost is involved, compute the cost of new common stock (Kn). Cost of new common stock 8.41 %
