Problemballack cos common stock currently sells for 3675, Ask an Expert

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Problem:

Ballack Co.'s common stock currently sells for $36.75 per share. The growth rate is a constant 12.8%, and the company has an expected dividend yield of 5%. The expected long-run dividend payout ratio is 20%, and the expected return on equity (ROE) is 16%. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred.

Required:

Problem: What would be the cost of new equity? Round your answer to two decimal places.

Note: Provide support for your rationale.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91162086

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