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jasenka [17]
3 years ago
14

rue 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.
Business
1 answer:
Eddi Din [679]3 years ago
7 0

Answer: False

Explanation:

Flotation costs are the costs that are incurred by a company whenever the company is issuing new securities. They are fee that are charged by the financial institutions for services such as legal and underwriting services.

Flotation costs are additional costs associated that are incurred when a new common stock is raised.

You might be interested in
The parents of a young child decide to make annual deposits into a college savings account. The first deposit will be made on he
Gnom [1K]

Answer:

The amount of the equal, annual deposits made on birthdays 5 through 15 is $3,970.58

Explanation:

First, let's calculate the present value of the college expenses on her 17th birthday (a year before college) using NPV formula

NPV(9%, 20000...32000) = $82,839.69

Now, its value on 15th birthday should be equal to 82,839.69 / (1 + 9%)² = $69,724.51

Using the PMT formula, we can calculate the annual amount they have to invest for 11 years to get to this sum at 9% annual rate

PMT(rate = 9%, nper = 11, pv = 0, fv = 69,724.51, 0) = $3,970.58

5 0
3 years ago
According to OSHA standards, a competent person is defined as one who is capable of identifying existing and predictable hazards
Olin [163]

Answer:

True

Explanation:

OSHA standards are health and safety rules that an employer must put in place to ensure the safety of employees and reduce hazards in the workplace.

Different standards are applicable to different industries like the construction , maritime and other industries.

A competent person , according to the standard is one who is capable of identifying existing and predictable hazards in the surroundings , or working conditions which are unsanitary , hazardous or dangerous to employees and who has authorization to take prompt corrective measures to eliminate them.

6 0
2 years ago
Clabber Company has bonds outstanding with a par value of $119,000 and a carrying value of $108,700. If the company calls these
Vladimir79 [104]

Answer:

option (b) $4,200 gain

Explanation:

Data provided in the question:

Par value of outstanding bonds  = $119,000

Carrying value of the bonds = $108,700

Price at which bond is called = $104,500

Now,

Gain on the retirement is calculated using the relation as;

Gain on retirement

= Carrying value of Bonds - Price at which bond is called

= $108,700 - $104,500

= $4,200

Since, the result is positive, therefore a gain will be recognized

Hence, correct answer is option (b) $4,200 gain

6 0
3 years ago
Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $206,000 of raw materials on credit
neonofarm [45]

Answer:

$14,000 under applied

Explanation:

Given that

Material production = $203,000

Application rate = 150%

The computation of amount of overhead is shown below:-

Overhead = Material production × Application rate

= $203,000 - ($126,000 × 1.5)

= $203,000 - $189,000

= $14,000 under applied

Therefore, for computing the overhead we simply multiply the material production with application rate percentage.

3 0
2 years ago
Kelly Slater owns a parcel of land in Palm Springs and is considering two possible development options which both use his signat
expeople1 [14]

Answer:

d. Choose Option B because it has a higher NPV

Explanation:

The computation is shown below:

For Option A:

Investment = $10 million

Present Value of cash flows = Cash flow ÷ Discounting rate

= $2 ÷  10%

= $20 million

Now

NPV = $20 - $10

= $10 million

We know that

IRR is the rate at which the NPV will be zero

So,  2 ÷  r - 10 = 0

r = 20%

For Option B:

Investment = $50 million

Present Value of cash flows = $6.5 ÷  10% = $65 million

NPV = $65 - $50 = $15 million

we know that

IRR is the rate at which the NPV will be zero

So, 6.5÷ r -50 = 0

r = 13%

Based on NPV, Option B should be selected as it contains higher NPV as compared to option A.

However, Based on IRR, Option A should be chosen as it contains higher IRR and a higher IRR represent a higher profit percentage

 

7 0
3 years ago
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