Messman Manufacturing will issue common stock to the public for $40. The expected dividend and the...
Messman Manufacturing will issue common stock to the public for $40. The expected dividend and the growth in dividends are $2.75 per share and 5%, respectively. If the flotation cost is 12% of the issue's gross proceeds, what is the cost of external equity, re? Round your answer to two decimal places.
Homework Answers
Cost of Capital = Next Div / Net Proceeds + Growth Rate,
= 2.75 / 35.2( 40 x 88%) + 5%
= 12.81%
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Messman Manufacturing will issue common stock to the public for
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