Cost of retained earnings

Anonymous
timer Asked: Apr 13th, 2017

Question description

A firm’s stock has a beta of 1.05, the expected return on the market is 12 percent, and the risk-free

rate is 5 percent. The firm’s marginal tax rate is 30%. If the firm were to issue new common stocks,

investment bank will charge 6% flotation cost. From this information, if the firm decides to spend

retained earnings in positive NPV project, what would be the cost of the retained earnings?

Studypool has helped 1,244,100 students
flag Report DMCA
Similar Questions
Hot Questions
Related Tags

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors