Expert: Abe Mantell - 6/7/2007

Question
Javits & Sons’ common stock is currently trading at $30 a share.  The stock is expected to pay a dividend of $3.00 a share at the end of the year (D1 = $3.00), and the dividend is expected to grow at a constant rate of 5 percent a year.  If the company were to issue external equity, it would incur a 10 percent flotation cost.  What are the costs of internal and external equity?

Answer
Hello Rhonda!

Wow, I just found this question of yours from the summer!

I had "been on vacation" from AllExperts since then...

I gather it is a bit too late to help, eh?

Oh well, I hope you got help on it or (better) figured it
out yourself.

Happy Holidays!

Abe Mantell