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spin [16.1K]
4 years ago
14

Hettenhouse Company's perpetual preferred stock sells for $102.50 per share, and it pays a $9.50 annual dividend. If the company

were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC?
Business
1 answer:
solniwko [45]4 years ago
5 0

Answer:

The company's cost of preferred stock for use in calculating the WACC is 9.65%

Explanation:

For computing the cost of preferred stock, the following formula should be used which is shown below

= Annual dividend based on preferred stock ÷ (Price per share × Flotation cost)

where,

Flotation cost = 1- rate

                      = 1- 4% = 0.96

= $9.50 ÷ ($102.50 × 0.96)

= $9.50 ÷ $98.4

= 9.65%

The flotation cost should be deducted because it is a one time expense. Thus, it would be minus from price per share.

Hence, the company's cost of preferred stock for use in calculating the WACC is 9.65%

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The channel of distribution are classified based on:

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3 years ago
An extended period of little or no growth in gdp, wages, and prices is a period of?
dolphi86 [110]

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Stagnation can occur as a temporary condition, such as a growth recession or temporary economic shock. Stagnation is a situation which occurs within an economy when total output is either flat, declining, or growing slowly.

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3 0
2 years ago
A client presents with chief complaints of unexplained weight gain and back pain from a compression fracture of the vertebrae. O
kozerog [31]

Answer:

The correct answer is Cushing's Syndrome.

Explanation:

Cushing's syndrome, also known as hypercortisolism, is a disease caused by the increase in the hormone cortisol. This excess cortisol can be caused by various causes. The most common, which affects 60 or 70% of patients, is an adenoma in the pituitary gland; This form of the syndrome is specifically known as Cushing's disease. Other causes of Cushing's syndrome are tumors or abnormalities in the adrenal glands, chronic glucocorticoid use or excessive ACTH production caused by a pituitary adenoma. ACTH is the hormone, produced by the pituitary gland, that stimulates the adrenal glands to produce cortisol. This disorder was described by the American neurosurgeon doctor Harvey Cushing, who reported it in 1932.

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3 years ago
You sell one December futures contracts when the futures price is $1,010 per unit. Each contract is on 100 units and the initial
jonny [76]

Answer:

balance in the margin account therefore goes down from $2,000 to $1,800

Explanation:

given data

contract  = 100 units

futures price = $1,010 per unit

initial margin = $2000

maintenance margin = $1500

futures price rises =  $1,012 per unit

solution

we get here by short sold the futures contract so profit when price goes up  is

loss = $1,012 - $1,010 = 2 per unit

short position loss is  = 2 × 100 = 200

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so balance in the margin account therefore goes down from $2,000 to $1,800

4 0
3 years ago
What is a contingent beneficiary on a life insurance policy
Ludmilka [50]

Answer and Explanation:

A life insurance policy assures a lumpsum amount to the beneficiaries of the deceased policy holder against premiums paid during the holder's life.

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7 0
4 years ago
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