Question 7 5 pts Weaver Brothers expects to earn 350 per sha

Question 7 5 pts Weaver Brothers expects to earn $3.50 per share (Es). and has an expected dividend payout ratio of 60%. Its expected constant dividend growth rate is 6.2%, and its common stock currently sells for $30 per share. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of equity from new common stock? Your answer should be between 10.15 and 16.90, rounded to 2 decimal places, with no special characters D | Question 8 5 pts Sorensen Systems Inc. is expected to pay a dividend of $3.40 at year end (D). the dividend is expected to grow at a constant rate of 5.50% a year, and the FS FS 8

Solution

cost of equity for new common stock = 3.50*0.6*1.062/30*0.95 + 6.2%

cost of equity for new common stock = 14.03%