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mafiozo [28]
3 years ago
7

Rollins Corporation is estimating its WACC. Its target capital structure is 20 percent debt, 20 percent preferred stock, and 60

percent common equity. Its bonds have a 12 percent coupon, paid semiannually, a current maturity of 20 years, and sell for $1,000. The firm could sell, at par, $100 preferred stock which pays a 12 percent annual dividend, but flotation costs of 5 percent would be incurred. Rollins' beta is 1.2, the risk-free rate is 10 percent, and the market risk premium is 5 percent. Rollins is a constant-growth firm which just paid a dividend of $2.00, sells for $27.00 per share, and has a growth rate of 8 percent. The firm's policy is to use a risk premium of 4 percentage points when using the bond-yield-plus-risk-premium method to find rs. The firm's marginal tax rate is 40 percent. What is Rollins' cost of preferred stock? Select one: a. 10.0% b. 11.0% c. 12.0% d. 12.6% e. 13.2%
Business
1 answer:
Serggg [28]3 years ago
4 0

Answer:

d. 12.6%

Explanation:

Rollins Corporation will receive $100 - ($100 x 5% flotation costs) = $100 - $5 = $95 net for each preferred stock issued

Since it will have to pay $12 on preferred dividends, the cost of preferred stocks = preferred dividend per preferred stock / net amount received per preferred stock = $12 / $95 = 0.1263 = 12.6%

Flotation costs are costs that a corporation incurs when issuing new stocks or bonds, and they include legal fees, underwriting fees, etc.

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The closing stage in the selling process involves obtaining a purchase commitment from the prospect. This stage is the most impo
tankabanditka [31]

Answer:

Telltale signals indicating a readiness to buy include questions , financial negotiation, and counteroffers answers

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Looking back over the last ten years or so, what was changed in your workplace? What do you think will happen next in your work
avanturin [10]

As 2020 draws near, it’s hard not to reflect on the past decade- so much has changed in the 10 years that flew by. In 2010, those who even had a smartphone were carrying around an iPhone 4 or a BlackBerry OS 6.0 version.

While the illustrious BlackBerry has all but disappeared from the workplace of 2019, there has been plenty of technologies in its wake to replace it. Let’s take a look at how the workplace has changed, communication tools and otherwise, in the past decade.

1. Collaboration over competition

“So many things have happened in the last decade that have really accelerated this change from competition to collaboration,” said Ann Shoket, workplace thought leader and former Editor-In-Chief of Seventeen Magazine.

“So first of all this old idea that there was room at the table for one woman, and you would fight tooth or nail for that spot, so obviously there was a lot of competition, particularly among women.

“Then the next generation, Millennial women, came in and made more room at the table and brought their friends along with them. That was the shift toward collaboration.”

2. It’s an employee market, not an employer market  

“Reflecting back on 2010 and what the economic circumstances were versus where we are at today, the competition for talent was very different in 2010 than as we enter 2020,” said Rhiannon Staples, the Chief Marketing Officer at Hibob.

Low unemployment rates today mean that job seekers have more options, and employees have more leverage in terms of what they can expect of their company due to the competition for top talent.

“It really is on businesses to help develop an environment, a culture, and perks that really draw the best talent in the market,” Staples said. “That’s really very different from where we were just 10 years ago.”

3. Push towards a more remote workforce

Anyone in the workforce 10 years ago won’t be shocked that the change in when and where we work made this list. Whereas in the past remote work was reserved for special situations,  that kind of idea is now replaced by a lot more freedom of where you work and when you work, and that’s not just people who are entrepreneurs. This idea is something that everybody wants out of work, to have a more flexible time frame to be free from the office. This idea of freedom is such an important piece of where we are going at work.

“That kind of idea is now replaced by a lot more freedom of where you work and when you work, and that’s not just people who are entrepreneurs,” Shoket said. “This idea is something that everybody wants out of work, to have a more flexible time frame to be free from the office. This idea of freedom is such an important piece of where we are going at work.”

8 0
3 years ago
As you read the business news, you come across an advertisement for a bond mutual fund – a fund that pools the investments fro
Alika [10]

Answer:

Follows are the solution to this question:

Explanation:

Follows are the two ways of describing its high return:

Firstly, the mutual fund is invested in pretty unstable debt and is reciprocating with greater yields for taking a risk.

Secondly, during every decrease in bond yields, the finance kept bonds so the income on stocks exceeded this same rate of interest significantly. Remember that bond costs skyrocket as interest rates drop as well as give the purchaser an investment income. Because once interest rates are now close to zero, it's also likely that they could increase as well as the owners would then lose their money. Its high return could be due to a drop in interest rates, and not only will it not be replicated, but the low or even low return will almost definitely be followed by either a rise in interest rates.

6 0
3 years ago
Sandy Kupchack just graduated from State University with a bachelor’s degree in history. During her four years at the university
Klio2033 [76]

Answer: $611.57 or $612 rounded to nearest dollar.

Explanation:

She would have to make a constant payment per quarter which makes it an annuity.

The $10,000 is the present value of the annuity.

The quarters remaining are = 5 years * 4 = 20 quarters

Quarterly interest = 8%/4 = 2%

10,000 = Annuity * Present Value of Annuity factor, 20 periods, 2%

10,000 = Annuity * 16.3514

Annuity = 10,000/16.3514

= $611.57

6 0
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