Question

Ford Motor Company issued common stock at $80 per share. The expected dividend per share at...

Ford Motor Company issued common stock at $80 per share.

The expected dividend per share at the end of the year is $6.0 and is expected to grow at 4% annually.


Required:

(a) How much will be the expected rate of return on common stock?

(b)    If Ford Motor issues new common stock at flotation cost of $2, how much will the cost of new common stock be? Why does cost change?

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