Answer:
McDonald's Corp
The cost of capital for the preferred stock is:
10.67%
Explanation:
a) Data and Calculations:
Market price of preferred stock = $178
Preferred stock dividend = $19
Cost of capital = Preferred stock dividend/Market price of preferred stock * 100
= $19/$178 * 100
= 10.67%
b) The cost of capital for McDonald's preferred stock is the finance cost or interest cost that it must incur for financing its projects using preferred stock. This represents the 10% of the preferred stock value that is paid out to preferred stockholders.
Answer:
A) Both NPV and going-in IRR to increase
Explanation:
The company's weighted average cost of capital (WACC) includes both equity and debt, and if the cost of equity is higher than the cost of debt, an increase in the percentage of debt will lower the company's WACC. The WACC is used as the discount rate to calculate the net present value (NPV) of the project.
If the discount rate is lower, then the present value of the cash flows will be higher, increasing the NPV. The internal rate of return (IRR) is the interest rate required for the NPV to be equal to $0, so if the NPV increases, then you need a higher interest rate to make it equal $0 (therefore the IRR is higher).
Answer:
Explanation:
Planning function is the process of establishing goals and arranging them in logical order for the purpose of achieving a desired goal.
Planning is an important aspect of an organization so as to help them achieve their goals faster. It is done at all levels in an organization. Planning is done using the available resources, also achieving a balance between the needs and wants of the organization.
Answer:
A. Lowering the prime rate on bank loans
Explanation:
Prime rates are the interest rates that the commercial banks charge their most credit-worthy customers, mostly corporates. These customers are judged low-risk clients and get loans at lower interest rates compared to retail customers. If a commercial bank lowers the prime rate, the normal interest rates are also likely to decrease.
The discount rate is the interest rate at which commercial banks will means commercial banks are obtaining loans at an expensive rate. Consequently, they will charge customers a high-interest rate for loans advanced. If the Federal Reserve reduces the discount rate, banks will reduce interest rates on loans. The banks will be accessing credit from the Fed at lower interest rates.