Homework Answers
1.
=Preferred Dividend/Price
=8.50/100=8.50%
2.
=117*5.40%
=$6.31800
3.
=117-6.318
=$110.68200
4.
=19.75/110.68200
=17.84%
5.
increases/raises
6.
sufficient/high
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What are the correct answers and how did you solve for them? please show work! thanks...
What are the correct answers and how did you
solve for them? please show work! thanks
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Should not/ should
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Last two options are (should/ should not) and (are/ are not)
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What are the correct answers and how did you
solve for them? please show work! thanks
Aa Aa 3. The cost of preferred stock Firms that carry preferred stock in their capital mix want to not only distribute dividends to the company's common stockholders but also maintain credibility in the capital markets so that they can raise additional funds in the future and avoid potential corporate raids from preferred stockholders. Consider the case of Red Oyster Seafood Company The CFO...
Should not/ should
are/ are not
4. The cost of preferred stock Aa Aa E Firms that carry preferred stock in their capital mix want to not only distribute dividends to common stockholders but also maintain credibility in the capital markets so that they can raise additional funds in the future and avoid potential corporate raids from preferred stockholders. Consider the case of Happy Lion Manufacturing Inc. Happy Lion Manufacturing Inc. has preferred stock that pays a dividend of $8...
5. The cost of new common stock True or False: The following statement accurately describes how firms make decisions related to issuing new common stock. Taking flotation costs into account will reduce the cost of new common stock. False: Flotation costs are additional costs associated with raising new common stock. True: Taking flotation costs into account will reduce the cost of new common stock, because you will multiply the cost of new common stock by 1 minus the flotation cost-similar...
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The cost of issuing new common stock is calculated the same way as the cost of raising equity capital from retained earnings. True: The cost of retained earnings and the cost of new common stock are calculated in the same manner, except that the cost of retained earnings is based on the firm's existing common equity, while the cost of new common stock is based on the value of the firm's share price net of its flotation cost. False: Flotation...
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