1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
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%

You might be interested in
Murray Motor Company wants you to calculate its cost of common stock. During the next 12 months, the company expects to pay divi
frozen [14]

Answer:

Cost of retained earnings  = 0.13

Explanation:

given data

(D1) = $1.80

current price = $36  

growth rate = 9 percent

solution

we get here Cost of retained earnings  (Ke) that is express as

Cost of retained earnings = ( D1 ÷ P ) + g    ................1

here P is price and g is growth rate

put here value and we get

Cost of retained earnings =  (1.80 ÷ 36 ) + 0.08

Cost of retained earnings  = 0.13

4 0
3 years ago
I need help with question 1 and 2!!
Mila [183]
Pneumonoultramicroscopicsilicovolcanoconiosis
5 0
3 years ago
Mark would like to apply for a loan. He should
Lapatulllka [165]

Answer:

of course, he should.

7 0
3 years ago
Read 2 more answers
Decision Point: Considering Alternatives Because of your inexperience, you don't know how many alternatives should be considered
Ber [7]

Answer:

The answer is stated below:

Explanation:

Select a limited number of alternatives to consider: For example, considering the top 3 alternative suppliers.

Then generate or create a list of as many as possible of alternative suppliers.

Rely on the gut in order to make a decision regarding the right number of alternatives when you feel the time is right.

Deciding or choosing the limited number of alternatives , this concept is known as the bounded rationality. For most of the businesses, this is the most realistic approach for dealing with alternatives.

5 0
3 years ago
The following expenditures relating to plant assets were made by Adam Company during the first 2 months of 2020.
dem82 [27]

Explanation:

a.)

In terms of the cost principle, the cost of acquiring a plant asset involves all of the expenditures required to get this asset and also to get ready to serve it's purpose.

Cost is measurable by the cash amount paid for a transaction that has to do with money or the money equivalent paid when assets that are not cash are used as a means of payment.

the cash equivalent is the same as the fair market value of the assets that were given or received..

b )

the account title that expenditure should be debited

1. 5000 paid for land

2. 200 paid is for factory machine equipment

3. 850 paid for delivery truck is for equipment

4. 17500 paid for parking lot is for land improvement

5. 250 paid for companies name to be printed on truck is equipment

6. 8000 paid for installation is for equipment

7. 900 paid for insurance policy on truck is prepaid insurance

8. 75 paid as license fee is for license insurance

8 0
3 years ago
Other questions:
  • A​ zero-coupon bond can be redeemed in 20 years for $ 10 comma 000.$10,000. how much should you be willing to pay for it now if
    8·1 answer
  • _____ are events where employers and job seekers come face to face.
    14·2 answers
  • The country of Cretonia is the only source of the rare mineral zhytan used in nuclear reactors. The country of Fredonte can prod
    14·1 answer
  • Regardless of whether a business uses FIFO, LIFO, or weighted average cost for its inventory costing system, cost of goods avail
    9·1 answer
  • Income statement. Construct the Barron​ Pizza, Inc. income statement for the year ending 2015 with the following information ​(t
    7·1 answer
  • Suppose the price of gasoline decreases from $4.20 to $2.00, and in response quantity demanded increases from 10600 to 11200. Us
    5·1 answer
  • When partners own different portions of the business, the terms should be stated clearly in what document?
    6·2 answers
  • A mortgage broker advertises a 30-year fixed-rate loan at a 2.00% rate. After the borrower arrives at the office and begins an a
    11·1 answer
  • On December 21, 2020, Sage Company provided you with the following information regarding its equity investments. December 31, 20
    12·1 answer
  • If the demand for loans increases, the interest rate will fall.<br><br> True or false
    7·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!