Rhodok Corporation has preferred stock outstanding. The stock has a 11% dividend rate. The stock's market price is $80 per share, and its par value is $75. If new shares are issued, the firm will pay $2 per share in flotation costs. The corporate tax rate is 21%. What is the company's cost of preferred stock financing? 12.00% 9.12% 10.58% 9.74%

Q: The ABC Co. has 1.4 million shares of stock outstanding. The stock currently sells for $20 per…

A: A company uses various sources of funds to finance its operation. The company aims at minimizing the…

Q: The preferred stock of Pollard's Pools pays an annual dividend of $5.50 a share and sells for $42 a…

A: In this question we need to calculate the cost of preferred stock. Given details are : Annual…

Q: McGraw Hill publishers has 200,000 shares of common stock outstanding with a par value of £1.00 per…

A: We need to use CAPM for calculation of cost of equity Cost of equity =Risk free rate+ Beta*Market…

Q: S Corporation is planning to issue 10,000 shares of 10%, P100 par value preferred stocks for P160…

A: Par Value = 100 Value = 160 Dividend = Dividend Rate * Par Value = 10%*100 = 10

Q: Jack's Construction Co. has 80 bonds outstanding that are selling at their par value of $1,00O each.…

A: The Weighted Average Cost of Capital is calculated with the help of following formula  WACC = Ke ×…

Q: MV Corporation has debt with market value of $96 million, common equity with a book value of $104…

A: We have : Market Value of debt  : $96 millionBook Value of Equity : $104 millionPreferred Stock :…

Q: A firm has 29,000 shares of common outstanding with a market value of $45.5 per share and a book…

A: Number of common stock = 29000 Market value per share = $45.5 Number of Preferred  Stock = 7000 Book…

Q: Bill's Boards has 6.5 million shares of common stock outstanding, 5.5 million shares of preferred…

A: WACC is the weighted average cost of capital. It is the discount rate which is used for discounting…

Q: Using the following information calculate the WACC of Aqua Ltd. The company has 0.3 million shares…

A: The Weighted average cost of capital(WACC) refers to the financial ratio that calculates the overall…

Q: Western Electric has 35 000 shares of ordinary shares outstanding at a price per share of $47 and a…

A: Therefore, the weighted average cost of capital is 11.26%.

Q: NY plc, which pays corporation tax at 33%, has the following capital structure:   Ordinary shares:…

A: The weighted average cost of capital (WACC) measures a company's average cost of capital from all…

Q: Grill Works and More has 8 percent preferred stock outstanding that is currently selling for $49 a…

A: Calculation of Cost of Preferred Stock:

Q: FarCry Industries, a maker of telecommunications equipment, has 3 million shares of common stock…

A: Weighted Average Cost of Capital (WACC) is the overall cost of capital from all the sources of…

Q: McGraw Hill publishers have 200,000 shares of common stock outstanding with a par value of £1.00 per…

A: The weighted average cost of capital (WACC) refers to the average cost that is paid by a company to…

Q: Buoyant Cruises plans to issue preferred stock with a $110 par value and a 6 percent dividend.  Even…

A: Computation:

Q: What is the weight of the preferred stock as it relates to the firm s weighted average cost of…

A: Information Provided: Bonds face value = $420,000 Selling price of bonds = $357,000 ($420,000 * 85%)…

Q: McGraw Hill publishers has 200,000 shares of common stock outstanding with a par value of £1.00 per…

A: The weighted average cost of capital is the average cost of raising capital from the various sources…

Q: What weight should you use for preferred stock

A: Weighted Average Cost of Capital is the cost a company pays for its employed capital. It is the…

Q: Colliers, Inc., has 100,000 shares of cumulative preferred stock outstanding. The preferred…

A: Annual dividend entitlement of preferred shareholders = Cumulative preferred shares outstanding *…

Q: Using the following information calculate the WACC of Aqua Ltd. The company has 0.3 million shares…

A: WACC is the overall average cost to the firm on securities issued by the firm. To arrange the funds,…

Q: Nacho Libre S.A. has 4,000.000 common shares outstanding that trade for $45.00 per share. The…

A: Cost of capital indicates the value of return a business expects to earn from its investment. It…

Q: Western Electric has 35,000 ordinary shares outstanding at a price per share of $47 and a rate of…

A: Market value = Debt + Equity + Preferred stock Market value = ($450,000*102%) + (35,000*$47) +…

Q: Tammuz Enterprises, a public shareholding company, wants to calculate its weighted average cost of…

A: WACC is the overall average cost of the firm to arrange the funds from the different sources. It is…

Q: Jerald Toy Corporation has 7% cost of debt, 11% cost of equity, and 8% cost of preferred stock.…

A: The WACC is a monetary proportion that computes an organization's expense of financing and procuring…

Q: McCall Corporation has a capital structure consisting of 55 percent common equity, 30 percent debt,…

A: The firm's cost of capital is the total cost of different sources of finance weighted by their…

Q: A Corporation issued preferred stocks for P120 per share. The issue price is P20 more than the…

A: Stock price (P) = P120 Annual dividend (D) = P12 Underwriting cost (UC) = P10 Tax rate = 30%

Q: Bulldogs Inc. has a financial break-even point at P163,500. How much is the total preferred…

A: Financial breakeven deals with bottom line of company income statement. It is the level of EBIT at…

Q: Nacho Libre S.A. has 3,000,000 common shares outstanding that trade for $20.00 per share. The…

A: WACC = (cost of equity * weight of equity) + (cost of debt *weight of debt)

Q: Stout Inc.'s perpetual preferred stock sells for $65.00 per share, and it pays an $8.50 annual…

A: Calculation of cost of preferred stock: Answer: Cost of preferred stock is 13.62%, option (b)

Q: Apollo has $5,000,000 outstanding of 8 percent preferred stock; the company has a 40 percent tax…

A: Preferred Stock - Preferred Stock are the stocks issued to the preference shareholders of the…

Q: Fantana Company’s preferred stock currently sells for $100.00 per share, and it pays an $6.00 annual…

A: Cost of capital can be defined as the total expense incurred by the company in accumulation of fund…

Q: WorldTrans is an all-equity firm with 500,000 shares outstanding. It has $2,000,000 of EBIT, and…

A: The price per share after the recapitalization can be computed using the method as follows:

Q: Buoyant Cruises plans to issue preferred stock with a $120 par value and a 5 percent dividend. Even…

A: Calculation of cost of issuing preferred stock:

Q: Mars company plans to issue some 100 preferred stock with an 11% dividend. The stock is selling on…

A: Dividend on preferred stock = 11% Market Price of stock = 97 Tax will have no impact on cost of…

Q: Charleston Mills is an all-equity firm with a total market value of $221,000. The firm has 8,000…

A: given, Total market value =$221,000 shares outstanding =8000 shares

Q: JS Corporation has 9 million shares of common stock outstanding, 250,000 shares of RM6 annual…

A: Computation of cost of debt is as follows: Face value =RM 1000Current price =RM 930Annual coupon…

Q: The ABC Co. has 1.4 million shares of stock outstanding. The stock currently sells for $20 per…

A: The weighted average cost of capital (WACC) is a calculation for the cost of capital with…

Q: The Greenbriar is an all-equity firm with a total market value of $551,000 and 21,700 shares of…

A: The number of shares that can be repurchased can be calculated using following formula Repurchase…

Q: Palmetto Corporation has preferred stock that pays a 9% dividend.  If the firm issues new shares,…

A: Dividends are 9% of $50 = $4.5 Stock price = $50 and Flotation cost = 3%. Using the below formula:…

Q: TKK Co., a firm that has 10,000 preferred outstanding shares, determined its financial break-even…

A:

Q: FarCry Industries, a maker of telecommunications equipment, has 5 million shares of common stock…

A: Number of common stocks = 5 million Number of preferred stocks = 2 million Number of bonds = 20000…

Q: A. Torch Industries can issue perpetual preferred stock at a price of $55.00 a share. The stock…

A: A combination of the long-term debts and different types of stocks to raise funds for the business…

Q: Charlotte's Crochet Shoppe has 17,300 shares of common stock outstanding at a price per share of $85…

A: Weighted average cost of capital (WACC)  is the rate of return which the company has to its capital…

Q: What is the component cost of preferred stock for a company that has $20 million in preferred stock…

A: Relevant information: Price of stock : $75 (Par value is used while computing the cost of preferred…

Q: Ayna Inc. is an all-equity firm with 400,000 shares outstanding.  It has P3,000,000 of EBIT, and…

A: Calculate the earnings per share before recapitalization as follows: Particulars Amount…

Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.