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Do Homework - Cristian Clementi - Google Chrome Secure | https://www.mathxl.com yerHomework.aspx?homeworkId=448 577574&questionld; = 1 &flushed; = false&cld-4704237;&centerwin; =yes FIN-350-MWF1230A-Fundamentals of Business Financs Cristian Clementi 12/4/17 1:33 PM Homework: Module 7: Chapter 9 Score: 0 of 5 pts P9-10 (similar to) Save 4 of 8 (0 complete HW Score: 0%, 0 of 40 pts Question Help Cost of common stock equity Ross Textiles wishes to measure its cost of common stock equity. The frm's stock is currently selling for $38.97. The firm expects to pay a 53.34 dividend at the end of the year (2016). The dividends for the past 5 years are shown in the tolowing table (Cick on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Year 2015 2014 2013 2012 2011 Dividend per Share 53.03 52.92 5242 52.29 52.05 After underpricing and fotation costs, the firm expects to net $35.46 per share on a new issue a. Determine the growth rate of dvidends from 2011 to 2015 b. Determine the net proceeds·n,·that the firm will actually receive a. The growth rate of dividends from 2011 to 2015 is % Found to two decimal places.) Enter your answer in the answer box and then click Check Answer Clear All Check Answer 1:33 PM O Type here to search ^ · 4x 12/4/2017 EB) |

Explanation / Answer

a) Growth rate, g = (D5 / D1)^(1/4) = (3.03 / 2.05)^(1/4) - 1 = 10.26%

b) Net Proceeds is the amoun that the firm will raise after underpricing and flotation costs = $35.46

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