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neonofarm [45]
3 years ago
14

A company's perpetual preferred stock currently sells for $102.50 per share, and it pays an $8.00 annual dividend. If the compan

y were to sell a new preferred issue, it would incur a flotation cost of 5.00% of the issue price. What is the firm's cost of preferred stock?
Business
2 answers:
oksian1 [2.3K]3 years ago
8 0

Answer:

9.10%

Explanation:

The formular for finding the cost of preferred stock is:

rp=Dp/(Pp(1-F))

Preffered stock price (Pp) = $92.50

Preferred dividend (Dp) = $8.00

Flotation cost (F) = 5%

5×100

=0.05

Therefore,

rp= 8.00/(92.50(1-0.05))

rp= 8.00/(92.50(0.95))

rp= 8.00/87.87

rp= 0.0910×100

rp= 9.10%

Thus, the cost of preferred stock is 9.10%

Alex73 [517]3 years ago
6 0

Answer:

8.21%

Explanation:

We can calculate this by the simple formula:

Price*(1 - Flotation cost) = Dividend/Cost of Pref. stock

Hence the formula turns into:

Cost of Pref. stock = Dividend / Price*(1 - Flotation costs)

Cost of Pref. Stock = 8 / 102.50*(1 - 0.05)

Cost of Pref. Stock = 8.21%

Hope this clear things up.

Good luck and cheers.

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Anastaziya [24]

Answer:

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Explanation:

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3 0
3 years ago
Using the aging method of accounts receivable method, $5,000 of the company's Accounts Receivable are estimated to be uncollecti
gogolik [260]

Answer:

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Explanation:

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by putting the value, we get

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6 0
3 years ago
g rporation's budgeted sales for February are $334,000. Webster pays sales representatives a commission of 6% of sales dollars.
UNO [17]

Answer:

$28,240

Explanation:

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Variable cost:

Sales commissions = $334,000 × 6%

                                = $20,040

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Total selling expenses = Total variable cost + Total fixed cost

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Select all that apply.
Evgesh-ka [11]
As a result of the Great Leap Forward, industrial production declined and power shifted to conservative Communist leaders. The answers would be the second and third option. The Great Leap forward also resulted in widespread famine. This led to decrease production, starvation and even c<span>hallenges to Mao Zedong's position. Hope this answer helps.</span>
4 0
3 years ago
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lyudmila [28]

Answer:

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Explanation:

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= $65 per unit

8 0
3 years ago
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