Answer:
Economic policy refers to the actions that governments take in the economic field. It covers the systems for setting interest rates and government budget as well as the labor market, national ownership, and many other areas of government interventions into the economy.
Explanation:
Answer: Option B
Explanation: In simple words, financing activities refers to the activities which are focused towards financing the operations of the business. These activities generally involves transactions in equity or debt securities etc.
Issuing common stock to stockholders will bring fund to the company and also will bring a change in the capital structure of the company. All the other options describe the operating and investing activities of the business.
Thus, from the above we can conclude that the correct option is B.
Answer:
The cost of the preferred stock, including flotation is 11.31%
Explanation:
In order to calculate the cost of the preferred stock, including flotation we would have to use the following formula:
cost of the preferred stock= <u>Annual Dividend</u>
Price×(1-Flotation Cost)
cost of the preferred stock=<u> $11 </u>
$108×(1-10%)
cost of the preferred stock=<u> $11 </u>
$97.20
cost of the preferred stock=11.31%
The cost of the preferred stock, including flotation is 11.31%
Answer:
5.75%
Explanation:
Firstly, we need to find the yield-to-maturity (YTM) of current outstanding bond as below:
Bond market price = Coupon/(1 + YTM) + Coupon/(1 + YTM)^2 + Coupon/(1 + YTM)^3 +...+ Coupon/(1 + YTM)^20 + Face value/(1 + YTM)^20, or:
1,382.73 = 130/(1 + YTM) + 130/(1 + YTM)^2 + 130/(1 + YTM)^3 +...+ 130/(1 + YTM)^20 + 1,000/(1 + YTM)^20
Solve the equation, we get YTM = 8.85%.
So, if he company wants to issue new debt, its after-tax cost of debt is 8.85% x (1 - 35%) = 5.75%
