Calculate the cost of external equity capital


Required:

The common stock for EV Company currently sells for $20 per share. The firm just paid a dividend of $1.50, and the dividend 3 years a go was $1.30. DIvidends per share are anticipated to grow at the same rate in the future as they have over the past 3 years. Floatation costs for new shares will be 6% of the selling price.

Required:

Question: Calculate the cost of external equity capital.

Note: Please show guided help with steps and answer.

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Accounting Basics: Calculate the cost of external equity capital
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