Bouchard Company's stock sells for $20 per share, its last dividend (D0 ) was $1.00, its growth rate is a constant 6 percent, and the company would incur a flotation cost of 20 percent if it sold new common stock. Retained earnings for the coming year are expected to be $1,000,000, and the common equity ratio is 60 percent. If Bouchard has a capital budget of $2,000,000, what component cost of
common equity will be built into the WACC for the last dollar of capital the company raises?
A) 11.30%
B) 11.45%
C) 11.80%
D) 12.15%
E) 12.63%
E
You might also like to view...
In light of attribution theory, evaluating the performance of a salesperson is all about the sales manager attributing causes of that performance
a. true b. false
Assume you manage a firm that faces transaction exposure. Your company manufactures and sells automobile parts around the world
You have just completed a large sale of parts to an auto manufacturer in France and received a promised payment of €172 per part. You have already sold 17,000 parts and are now awaiting payment which you expect 90 days from today. The exchange rate today is $1.25/€. Over the next ninety days, the direct exchange rate unexpectedly moves from $1.25/€ to $1.30/€. What is the gain in domestic revenue due to this unexpected move in the exchange rate? A) $106,000 B) $114,900 C) $118,500 D) $146,200