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Contact [7]
4 years ago
12

Weir inc.'s perpetual preferred stock sells for $97.50 per share, and it pays an $8.50 annual dividend. if the company were to s

ell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. what is the company's cost of preferred stock for use in calculating the wacc? hint: see textbook on how to adjust a stock price for floatation costs; they show it for common shares if not for preferred.
Business
1 answer:
ipn [44]4 years ago
3 0

We can use the PV of perpetuity formula as the dividends will be paid for the infinite period of time. But we need to do a small adjustment for floatation cost. Following formula can be applied:

Cost of preferred stock = Annual Dividend / (Price x (1- flotation cost %))

= 8.50 / ( 97.50 x (1- 0.04))

= 8.50/93.60

= 9.08%

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A side benefit of international trade is that it links national interests and increases the opportunity costs of war.
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Answer:

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7 0
3 years ago
Stoneheart Group is expected to pay a dividend of $3.25 next year. The company's dividend growth rate is expected to be 3.5 perc
Vera_Pavlovna [14]

Answer:

$37.79

Explanation:

The computation of the stock price is shown below:

Data given in the question

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So, the stock price is

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3 years ago
A long term care facility purchases at least 85% of its food and supplies from one distributor. this is an example of which type
Digiron [165]

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3 years ago
if Jane attends graduate school, it will take her two years, during which time she will earn no income. She will pay a total of
Soloha48 [4]

Answer:

she could earn a total of $71,000 instead of attending graduate school.

Explanation:

economic costs = accounting costs + opportunity costs

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$175,000 = $104,000 + unearned wages

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The answer is definitely 0.640
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