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stellarik [79]
3 years ago
10

Johnson Production Company paid a dividend yesterday of $3.50 per share. The dividend is expected to grow at a constant rate of

10% per year. The price of KayCee's common stock today is $40 per share. If KayCee decides to issue new common stock, flotation costs will equal $4.00 per share. KayCee's marginal tax rate is 35%. Based on the above information, the cost of new common stock is Select one: a. 19.63%. b. 20.09%. c. 26.41%. d. 17.55%.
Business
1 answer:
lara [203]3 years ago
5 0

Answer:

correct option is a. 19.63%

Explanation:

given data

dividend = $3.50 per share

constant rate = 10% per year

common stock = $40 per share

flotation costs = $4 per share

solution

we know formula that is

cost of retained earnings = \frac{Dividend}{Current price} + Growth rate

we will ignored Flotation costs  in this case

so it will be = \frac{3.5 * 1+0.1}{40} + 0.1

= 19.63 %

so correct option is a. 19.63%

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Answer:

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In Business management, the safety stock can be calculated using the following formula;

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Answer:

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See report below

Explanation:

The sales budget for the month of June would like as follows:

Budgeted Sales

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A                        40,000       $7          280,000

B                         39,000    $9            351,000

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A                        39,000       $7.10         276,900

B                        49,600       $8.90         441440

Sales Budget Report for the month of June 2019

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A                        280,000                  276,900         3,100      Unfavorable

B                        351,000                   441,440            <u>90,440  </u>favorable

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Answer:

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