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dutch74
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Joined: 24 Jun 2011
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Posted: 29 Aug 2011 at 01:52 \| IP Logged

Gibson enterprise issues 1000 of its 8%, $50 par value for
$52 dollars per share and incurred $2500 in flotation
costs. What was gibsons cost of equity capital?

Cant seem to figure this question out...any input?

thanks

tkphotomania
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Posted: 29 Aug 2011 at 08:36 \| IP Logged

$50 x 1000 x 8% = 4000
52 x 1000 - 2500 = 49500

4000/49500=8.08

Incorrect?

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dutch74
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Posted: 29 Aug 2011 at 18:33 \| IP Logged

yea your right. Thanks

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