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yaroslaw [1]
3 years ago
14

A company plans to issue new Preferred Stock that pays 6% on the Par Value of $25. Similar preferred stocks are current selling

in the market for Pp = $28. If the firm expects flotation costs of 8% per share, then what is the cost of newly issued preferred stock to the firm? The firms tax rate = 40%.
Business
1 answer:
statuscvo [17]3 years ago
6 0

Answer:

The cost of newly issued preferred stock to the firm is 5.82%

Explanation:

Annual dividend = $25 * 6% = $1.5

Present price = $28

Flotation costs = 8% = 8/100 = 0.08

Cost of new stock = Annual dividend / [Current price(1 - flotation costs)]

Cost of new stock = 1.5 / [ 28(1 - 0.08)]

Cost of new stock = 1.5 / [ 28(0.92)]

Cost of new stock = 1.5 / 25.76

Cost of new stock = 0.0582

Cost of new stock = 5.82% (Approx).

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Suppose a bank enters a repurchase agreement in which it agrees to buy Treasury securities from a correspondent bank at a price
Cloud [144]

Answer:

Yield with 6-day maturity is 7.70%

Yield with 18-day maturity is 2.57%

Explanation:

The formula for yield on repurchase is given as:

y = ( PAR – P ) / P x (360 / t )

P=Purchase price

PAR=Repurchase price

t= number of days of the transaction

In first scenario,PAR is $39 million,P is $38.95 million and t=6

y=($39000000-38950000)/38950000*(360/6)

y=7.70%

In the second scenario,details remained the same except for t that is 18

y=($39000000-38950000)/38950000*(360/18)

y=2.57%

This implies the longer the maturity the lesser the yield since yield is computed on daily basis.

3 0
3 years ago
All of the following distributions of stock dividends are taxable except: a. The shareholders have the choice to receive cash or
kati45 [8]

Answer:

d. The distribution gives preferred stock to some common stock shareholders and common stock to other common stock shareholders.

Explanation:

This is likely the answer to the question. There is no way preferred stock would be given to some common stock shareholders while common stock to other stock to others.

4 0
3 years ago
To automate one of its production​ processes, the Milwaukee Corporation bought three flexible manufacturing cells at a price of
liq [111]

Answer:

$1,521,800

Explanation:

The computation of cost basis is shown below:-

Three cells cost price = 3 × $470,000

= $1,410,000

Combination of rate charges = $30,000 + $16,000 + $39,000 + $3,600

= $88,600

Wages of one foreman = wage per hour × weeks worked × hours per week

= $29 × 5 × 40

= $5,800

Wages of 4 foremen = 4 × $5,800

= $23,200

Three cells cost basis = Three cells cost price + Combination of rate charges + Wages of one foreman

= $1,410,000 + $88,600 + $23,200

= $1,521,800

4 0
3 years ago
A monopolist will find that its marginal revenue curve Grupo de opciones de respuesta Lies below its demand curve and has the sa
alexdok [17]

Answer:

Lies below its demand curve and is steeper than its demand curve.

Explanation:

The marginal revenue curve for a monopolist lies below the demand curve because of the quantity effect. The quantity effect refers to the fact that even a monopolist must lower its price if it wants to sell a larger quantity of goods or services.

The slope of the marginal revenue curve is steeper than the demand curve because it reflects the market power of the monopolist. Instead, the marginal revenue curve for a perfectly competitive firm (with 0 market power) is horizontal or perfectly elastic.

5 0
3 years ago
The name for minimum energy expended to keep a resting, awake body alive is _______________. This represents about 60% to 70% of
Solnce55 [7]

The name for minimum energy expended to keep a resting, awake body alive is basal metabolic rate. This represents about 60% to 70% of total energy expenditure.

What is basal metabolic rate?

As we know that to keep our most life-sustaining activities at a position of rest, our body needs a lot of calories, so basal metabolic rate (BMR) simply helps in determining how much calories are actually needed to perform such activities such as energy needed at the time when our body is resting or we are sleeping. The best basal metabolic rate (BMR) is between 1000-2000, means there should be an intake of around 1000-2000 of calories each day so that these activities should be carried out.

Learn more about basal metabolic rate (BMR) here: brainly.com/question/27976523

#SPJ4

4 0
11 months ago
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