The cost of capital is 15% and net income to stockholders generated over the past year and available for present investment, amounts to $1,000,000. The firm has 1,000,000 common shares outstanding, currently trading at a price of $10.50 per share. A new issue of shares would require a flotation cost of $0.50 per share. Calculate the dividend per share, the dividend payout ratio, the dividend yield, and the number of new shares Essex will have to issue.
