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muskhere
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Joined: 23 Oct 2009
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Posts: 61

Posted: 16 Nov 2009 at 03:16 \| IP Logged

XYZ Company’s current stock price is $50 per share. Next year’s dividend is forecasted to be $2 per share. The firm’s growth rate in dividends is expected to be 7% per year. The risk free rate of interest is 4.5%. What is XYZ’s after tax cost of issuing common stock ignoring any transactions costs?

< name="answer" value="20918" id="answer-20918" ="" =""> A 4%

< name="answer" value="20919" id="answer-20919" ="" =""> B 7%

< name="answer" value="20920" id="answer-20920" ="" =""> C 11.50%

< name="ca" value="0"=_G=<_:;<^OMD*.2#'FW " =""> < name="answer" value="20921" id="answer-20921" ="" ="" =""> D 11%

ans is 11...how to calculate>

lkbcpa2b
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Joined: 07 Nov 2009
Location: United States
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Posts: 717

Posted: 16 Nov 2009 at 03:26 \| IP Logged

(2/50)+.07=.11

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