Please help me how to solve it step-by-step on EXEL You are required to use a fi

Question

Please help me how to solve it step-by-step on EXEL You are required to use a financial calculator or spreadsheet (Excel) to solve 10 problems (provided on page 3) related to the cost of capital. You are required to show the following 3 or each problem (sample questions and solutions are provided for guidance): (0) Describe and interpret the assumptions related to the problem (u) Apply the appropriate mathematical model to solve the problenm (ii) Calculate the correct solution to the problem. 2. ABC Corporation will issue new common stock to finance an common stock just paid a S1.50 dividend, and dividends are expected to grow at a constant rate 8% indefinitely. The stock sells for S45, and float on expenses of 5% of th selling price will be incurred on new shares. What is the cost of new stock?

Explanation / Answer

2.

the cost of new share=(Dividend in first year expected/(price-flotation cost))+growth rate

=(D1/(P-F))+g

=((1.50*1.08)/(45-(45*5%)))+8%

=11.79%

the above is the answer

for excel, you just need to put the above equation in any cell and press enter, you will get the answer as above. so no specific excel related function is required.

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