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Verdich [7]
2 years ago
7

Pepper Inc.’s common stock currently sells for $15.00 per share, the company expects to pay $1.925 dividend in the coming year a

nd it expects the dividend to grow at a constant growth rate of 6.00%. New stock can be sold to the public at the current price, but a flotation cost of 8% would be incurred. By how much would the cost of new stock exceed the cost of retained earnings? Do not round your intermediate calculations. Hint: Re-Rs
Business
1 answer:
dedylja [7]2 years ago
6 0

Answer:

The correct answer is 0.78%.

Explanation:

According to the scenario, the computation of the given data are as follows:

First we calculate the retained earning cost, then

Cost of retained earning = Dividend ÷ Price + Growth

= (1.925 × 70%) ÷ 15 + 6%

= 1.3475 ÷ 15 + 0.06

= 0.1498 or 14.98%

Now, Cost of equity = (Dividend ÷ Price (1 - Flotation cost ) + Growth

= (1.925 × 70% ) ÷ 15 (1 - 0.08) + 0.06

= (1.3475 ÷ 13.8 ) + 0.06

= 0.1576 or 15.76%

So, Exceed amount = 15.76% - 14.98% = 0.78%

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I think b is that the answer

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2 years ago
One of the indirect costs of bankruptcy is the effect that a potential bankruptcy has on the firm's decisions. The general resul
Oksana_A [137]

Answer: B. stockholders expropriate value from bondholders by selecting high-risk projects.

Explanation:

Bankruptcy simply means when an individual or business cannot pay back the funds that is owed to the creditor. When bankruptcy is declared by a particular business, the assets for the business are used in paying back the debt.

One of the indirect costs of bankruptcy is the effect that a potential bankruptcy has on the firm's decisions. The general result is that stockholders expropriate value from bondholders by selecting high-risk projects.

Therefore, option B is the answer.

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2 years ago
Assuming that taxes and net exports are zero, government purchases of goods and services are equal to $12, and gross private dom
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Answer:

GDP= $22

Explanation:

The groos domestic product (GDP) formula is:

GDP= Consumption (C)+ Investment (I)+ Government expenditure (G)+ Net exports (exports-imports)

The problem gives the following information:

G= $12

I=$10

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We do not have information about consumption, then we assume is zero.

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7 0
3 years ago
In a negotiation, to allow for concessions, the expectations expressed in the seller team's opening position should be:
ser-zykov [4K]

In a negotiation, to allow for concessions, the expectations expressed in the seller team's opening position should be higher than its target position

Option B

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Negotiation is a political dialogue that addresses a problem in a way acceptable to both sides. That group tries in a discussion to convince the other to adhere to its views. Both parties involved tend not to argue, rather seek to find some kind of agreement by mediation.

Talks require others, so that one side is always in the forefront of the talks. Nevertheless, even when the concession is marginal, the other should surrender.

Negotiation parties can differ. These may include negotiations between purchasers or even between the government of several or more nations, employers and future employees.

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What is the office that handles social security and unemployment go employees in the state of Washington
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