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Whitepunk [10]
3 years ago
12

Jana estimates that if it issues new common stock, the floation cost will be 15%. Jana incorporates the floation cost into the d

ivision's growth approach, What is the estimated cost of newly issued common stock, taking into account the floation cost?Pertinent information:firms tax rate=40%Jana's coupon=12%, semiannual, noncallable bond with 15 years remaining to maturity is $1,153.72. no short term interest bearing debt.current price of the firms 10%, $100 par value, quarterly dividend, perpetual preferred stock is $116.95. Jana would incur flotation costs equal to 5% of the proceeds on a new issue.Jana's common stock selling at $50/share. Last dividend was $3.12 and dividends are expected to grow at a constant rate of 5.8%. Jana's beta=1.2, yield on t-bonds=5.6%, market risk premium is estimated to be 6%. The firm uses a 3.2% risk premium
Business
1 answer:
Charra [1.4K]3 years ago
5 0

Answer:

The cost of newly issued common stock will be 5.8% after incorporating the effect of flotation cost.

Explanation:

WACC is the cost of capital of all the sources of finance. This cost of capital should consider all the sources of finance. Jana should include long term debts and equity financing costs to identify the Weighted average cost of capital. Preferred stocks are also added in the calculations.

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Fast fine foods markets some of its products to consumers looking for simple quick meals. Fast find foots also offer another lin
k0ka [10]

Answer: Market segmentation

Explanation:

Market segmentation is when a market is being divided based on the customers needs. Customers with similar characteristics or needs are grouped together.

Market segmentation helps a business in reaching customers with similarbjeeds quicker and this leads to improvement in satisfaction and customer relationships. This is the method used by Fast fine foods.

4 0
3 years ago
Gore Global is considering the two mutually exclusive projects below. The cash flows from the projects are summarized below.
d1i1m1o1n [39]

Answer:

D

Explanation:

Internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested

IRR can be calculated with a financial calculator  

Flying Car

Cash flow in year 0 = -$200,000

Cash flow in year 1 = 50,000

Cash flow in year 2 = 50,000

Cash flow in year 3 =80,000

Cash flow in year 4 =100,000

IRR = 13%

To find the IRR using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the IRR button and then press the compute button.  

7 0
4 years ago
Terrence Industries charges manufacturing overhead to products by using a predetermined application rate, computed on the basis
puteri [66]

Answer:

See below

Explanation:

First, we need to get the predetermined rate

Predetermined rate = Cost of manufacturing overhead / Cost driver

= $1,800,000/60,000

= $30

We will now calculate the application.

Actual labor hours × rate

= 61,500 × $30

= $1,845,000

We will now compare actual with overhead cost

= Applied Overhead cost - Actual manufacturing overhead

= $1,845,000 - $1,810,000

= $35,000

The above is an over application of overhead cost because the cost applied exceed the actual cost.

5 0
3 years ago
Baseball Corporation is preparing its cash budget for January. The budgeted beginning cash balance is $18,600. Budgeted cash rec
professor190 [17]

Answer:

Company should borrow = $15200

Explanation:

Below is the calculation for the borrowing amount:

Cash balance at the beginning = $18600

Add - Cash receipts = 186000

Less- Cash disbursements = (189200)

Budgeted cash balance = 18600 + 186000 - 189200 = 15400

Borrowing will be = Ending cash - 15400

Borrowing will be = 30600 - 15400

Borrowing will be = $15200

Company should borrow = $15200

6 0
3 years ago
Sometimes you find yourself getting off-task because your boss keeps piling on the work, and you aren't sure what to prioritize.
Reptile [31]

Answer:

B. ask you boss which stuff takes priority and then make a list to remember.

Explanation:

8 0
3 years ago
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