Which of the following actions will most likely increase a company's enterprise value? Issue common stock...
Which of the following actions will most likely increase a company's enterprise value?
- Issue common stock
- Issue preferred stock
- Invest in short-term investments
- Issue debt
Homework Answers
Ans Issue common stock
Issue common stock is a part of stockholder's equity. It increases the value of the firm as increase in equity also leads to increase in assets of the company.
Add Answer to:
Which of the following actions will most likely increase a
company's enterprise value?
Issue common stock...
With its current financial policies, Flagstaff Inc. will have to issue new common stock to fund...
With its current financial policies, Flagstaff Inc. will have to issue new common stock to fund its capital budget. Since new stock has a higher cost than retained earnings, Flagstaff would like to avoid issuing new stock. Which of the following actions would REDUCE its need to issue new common stock? Increase the percentage of debt in the target capital structure. Reduce the percentage of debt in the target capital structure Increase the dividend payout ratio for the upcoming year....
With its current financial policies, Flagstaff Inc. will have to issue new common stock to fund...
With its current financial policies, Flagstaff Inc. will have to issue new common stock to fund its capital budget. Since new stock has a higher cost than retained earnings, Flagstaff would like to avoid issuing new stock. Which of the following actions would REDUCE its need to issue new common stock? Increase the percentage of debt in the target capital structure. Reduce the percentage of debt in the target capital structure Increase the dividend payout ratio for the upcoming year....
g3.7 Which of the following actions are most likely to directly increase cash as shown on...
g3.7
Which of the following actions are most likely to directly increase cash as shown on a firm's balance sheet? Select the appropriate assumptions that underlie your answer. a. It issues $9 million of new common stock. b. It buys new plant and equipment at a cost of $3 million. c. It reports a large loss for the year d. It increases the dividends paid on its common stock. I. Statements (b) and (d) will increase the amount of cash...
what is r n (new common stock issue)? what is r p (new preferred stock issue)?...
what is r n (new common stock issue)?
what is r p (new preferred stock issue)?
what is r d (before tax rate on bonds)?
what is r i (after tax rate on bonds)?
what is r r (retained earnings)?
Company XYZ will pay in exactly one year $4 in dividends per share to its common stock shareholders. In exactly one year it will pay $2 in dividends per share to holders of its preferred stock. The flotation costs on...
what is r n (new common stock issue)? what is r p (new preferred stock issue)?...
what is r n (new common stock issue)? what is r p (new preferred stock issue)? what is r d (before tax rate on bonds)? what is r i (after tax rate on bonds)? -what is r r (retained earnings)? Company XYZ will pay in exactly one year $4 in dividends per share to its common stock shareholders. In exactly one year it will pay $2 in dividends per share to holders of its preferred stock. The flotation costs on...
Which one of the following is a source of cash? O increase in common stock O...
Which one of the following is a source of cash? O increase in common stock O decrease in retained earnings increase in accounts receivable O decrease in long-term debt Which one of the following is classified as an investment activity on the statement of cash flows? O purchase of inventory O purchase of equipment O repayment of a long-term debt O sale of common stock
The Cost of Capital: Introduction Companies issue bonds, preferred stock, and common equity to raise capital...
The Cost of Capital: Introduction
Companies issue bonds, preferred stock, and common equity to
raise capital to invest in capital budgeting projects. Capital is a
necessary factor of production, and like any other factor, it has a
cost. This cost is equal to the -Select-security analyst'smarginal
investor'scompany vendor'sItem 1 required return on the applicable
security. The rates of return that investors require on bonds,
preferred stocks, and common equity represent the costs of those
securities to the firm. Companies estimate...
A Bayani Bakery’s most recent FCF was $48 million; the FCF is expected to grow at...
A Bayani Bakery’s most recent FCF was $48 million; the FCF is expected to grow at a constant rate of 6%. The firm’s WACC is 12%, and it has 15 million shares of common stock outstanding. The firm has $30 million in short-term investments, which it plans to liquidate and distribute to common shareholders via a stock repurchase; the firm has no other nonoperating assets. It has $368 million in debt and $60 million in preferred stock. FCF = $48.0...
Javits & Sons' common stock currently trades at $33.00 a share. It is expected to pay an annual dividend of $1.25 a...
Javits & Sons' common stock currently trades at $33.00 a share. It is expected to pay an annual dividend of $1.25 a share at the end of the year (D1 = $1.25), and the constant growth rate is 4% a year. A) What is the company's cost of common equity if all of its equity comes from retained earnings? Round your answer to two decimal places. % B) If the company were to issue new stock, it would incur a...
Which of the following government acts will most likely lead to an increase in the level...
Which of the following government acts will most likely lead to an increase in the level of aggregate demand? A reduction in: public spending on social goods and infrastructure the capital gains tax foreign-based purchases direct investments transfer payments
With its current financial policies, Flagstaff Inc. will have to issue new common stock to fund its capital budget. Since new stock has a higher cost than retained earnings, Flagstaff would like to avoid issuing new stock. Which of the following actions would REDUCE its need to issue new common stock? Increase the percentage of debt in the target capital structure. Reduce the percentage of debt in the target capital structure Increase the dividend payout ratio for the upcoming year....
With its current financial policies, Flagstaff Inc. will have to issue new common stock to fund its capital budget. Since new stock has a higher cost than retained earnings, Flagstaff would like to avoid issuing new stock. Which of the following actions would REDUCE its need to issue new common stock? Increase the percentage of debt in the target capital structure. Reduce the percentage of debt in the target capital structure Increase the dividend payout ratio for the upcoming year....
g3.7
Which of the following actions are most likely to directly increase cash as shown on a firm's balance sheet? Select the appropriate assumptions that underlie your answer. a. It issues $9 million of new common stock. b. It buys new plant and equipment at a cost of $3 million. c. It reports a large loss for the year d. It increases the dividends paid on its common stock. I. Statements (b) and (d) will increase the amount of cash...
what is r n (new common stock issue)?
what is r p (new preferred stock issue)?
what is r d (before tax rate on bonds)?
what is r i (after tax rate on bonds)?
what is r r (retained earnings)?
Company XYZ will pay in exactly one year $4 in dividends per share to its common stock shareholders. In exactly one year it will pay $2 in dividends per share to holders of its preferred stock. The flotation costs on...
what is r n (new common stock issue)? what is r p (new preferred stock issue)? what is r d (before tax rate on bonds)? what is r i (after tax rate on bonds)? -what is r r (retained earnings)? Company XYZ will pay in exactly one year $4 in dividends per share to its common stock shareholders. In exactly one year it will pay $2 in dividends per share to holders of its preferred stock. The flotation costs on...
Which one of the following is a source of cash? O increase in common stock O decrease in retained earnings increase in accounts receivable O decrease in long-term debt Which one of the following is classified as an investment activity on the statement of cash flows? O purchase of inventory O purchase of equipment O repayment of a long-term debt O sale of common stock
The Cost of Capital: Introduction
Companies issue bonds, preferred stock, and common equity to
raise capital to invest in capital budgeting projects. Capital is a
necessary factor of production, and like any other factor, it has a
cost. This cost is equal to the -Select-security analyst'smarginal
investor'scompany vendor'sItem 1 required return on the applicable
security. The rates of return that investors require on bonds,
preferred stocks, and common equity represent the costs of those
securities to the firm. Companies estimate...
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