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mihalych1998 [28]
3 years ago
9

Tempo Corp. will issue preferred stock to finance a new artillery line. The firm's existing preferred stock pays a dividend of $

4.00 per share and is selling for $40 per share. Investment bankers have advised Tempo that flotation costs on the new preferred issue would be 5% of the selling price. Tempo's marginal tax rate is 30%. What is the relevant cost of new preferred stock?A) 7.00%B) 7.37%C) 10.00%D) 10.53%E) 15.00%
Business
1 answer:
Len [333]3 years ago
6 0

Answer:<u> </u><u><em>Relevant cost of new preferred stock = 10.53%</em></u>

Explanation:

Given:

Dividend = $4.00 per share

Selling for = $40 per share.

Flotation costs =  5% of the selling price.

Marginal tax rate is 30%.

We can compute the cost of new preferred stocks using the following formula:

Relevant\ cost\ of\ new\ preferred\ stock =\frac{ Dividend}{Current\ price\ after\ flotation\ Cost}

Relevant\ cost\ of\ new\ preferred\ stock =\frac{4}{40-(0.05\times40)}

∴ Relevant cost of new preferred stock = 10.53%

Therefore, the correct option is (d)

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liubo4ka [24]

Answer:Principal:150 Rate:2% Time:1 year

Explanation:

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5 0
3 years ago
At Crater Valley Manufacturing, workers are encouraged to find their own solutions to problems, and to implement their solutions
Marizza181 [45]

Answer:

a) Theory Y

Explanation:

Crater Valley Manufacturing has adopted the theory Y management approach.  Theory  Y proposes a participative management style, teamwork, and decentralization of the decision-making process. In the theory Y approach, managers encourage employees initiatives that will contribute to the success of the organization. Theory Y tries to match the organizations' objectives with the employees' aspirations.

<u>Some of theory Y assumption include</u>

  1. Employees have a natural tendency to work and play.
  2. Employees have self-direction and self-discipline in pursuit of organizational goals without external coercion or threats.
  3. An average person seeks and accepts responsibilities.
  4. Employee loyalty and commitment is as a result of job satisfaction and job reward.

5 0
3 years ago
What must audit firms do to perform financial statement audits for public companies? a. Register with the Public Company Account
TEA [102]

Answer:

a. Register with the Public Company Accounting Oversight Board.

Explanation:

As per the standards of Auditing an auditor has to be registered as an public accounting firm, and then only it can perform audit for public companies.

For this, it has to be registered with PCAOB United States.

where, PCAOB stands for Public Company Accounting Oversight Board.

Therefore, correct option is a.

8 0
3 years ago
__________ is the use of a third party to encourage labor and management to continue negotiating in an effort to settle a labor
grigory [225]
Mediation<span> is the use of a third party to encourage labor and management to continue negotiating in an effort to settle a labor dispute or achieve a mutually acceptable labor-management agreement.

Mediation is common in any disagreement when needing to come to a conclusion for an on-going issue. It's beneficial to have a mediator who is a third party to advocate and </span>clarify points each side is making. This helps facilitate without preference for both labor and management to agree/come to terms with an idea, issue or advancement they are facing. 
7 0
3 years ago
A Subaru representative has a solid relationship with Phil, a satisfied customer. Phil loves Subaru and will not accept anything
larisa86 [58]

Answer:

The correct answer would be, Customer's life time Value.

Explanation:

Subaru is an automobile company who is famous for its boxer engines in the cars above 1500 cc. Subaru is a division of Japanese transportation conglomerate.

A representative of Subaru has solid relationship with a customer, Phil. Phil is such a satisfied customer that he only wants Subaru every time he goes for a new purchase. Also he refers a lot of people to Subaru. The representative determines that if Phil continue to do so, his total value to the company would be $350,000. This figure includes Phil purchases as well as the purchases made by the people which he referred to Subaru. So this means, the representative has calculated the Phil's Lifetime Value.

8 0
4 years ago
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