Determining the Cost of Capital: Cost of Preferred Stock
The cost of preferred stock, r...
Business, 16.04.2020 00:11, yungkxng57
Determining the Cost of Capital: Cost of Preferred Stock
The cost of preferred stock, rp, used in the weighted average cost of capital equation is calculated as the preferred dividend, Dp, divided by the current price of the preferred stock, Pp. ,tax adjustment is made when calculating rp because preferred dividend aren't tax deductible; so the tax savings are associated with preferred stock.
Quantitative Problem: Barton Industries can issue perpetual preferred stock at a price of $58 per share. The stock would pay a constant annual dividend of $3.60 per share. If the firm's marginal tax rate is 40%, what is the company's cost of preferred stock? Round your answer to 2 decimal places.
%
Answers: 2
Business, 22.06.2019 03:30, jose0765678755
Joe finally found a house for sale that he liked. which factor could increase the price of the house he likes? a. both he and the seller each have a real estate agent. b. a home inspector finds faulty wiring in the house. c. the house has been for sale for almost a year. d. several buyers all want that same house.
Answers: 2
Business, 22.06.2019 13:00, ksteele1
Apopular low-cost airline, parson corp., has gone out of business. although the service and price provided by the airline was what customers wanted, the larger airlines were able to drive the low-cost airline out of business through an aggressive price war. which component of the competitive environment does this illustrate? a) threat of new entrants b)competitors c) economic factors d) customers d) regulators
Answers: 1
Business, 22.06.2019 15:40, kaitlynmorgan43
The cost of direct labor used in production is recorded as a? a. credit to work-in-process inventory account. b. credit to wages payable. c. credit to manufacturing overhead account. d. credit to wages expense.
Answers: 2