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St.Joe Trucking has sold an issue of $6 cumulative preferred stock to the public at a price of $60 per share. After issuance costs, St.Joe netted $57 per share. The company has a marginal tax rate of 40 percent.
a. Calculate the after-tax cost of this preferred stock offering assuming that this stock is perpetuity.
b. If the stock is callable in five years at $66 per share and investors expect it to be called at that time, what is the after-tax cost of this preferred stock offering? (Compute to the nearest whole percent).
I have discussion which deals with exercises in determining Equivalent Annual Rate (EAR.) This is closely related to the time value of money and deals with how frequency of compounding of interest rate affects value calculation.
Your company uses the 3-year MACRS method to depreciate the machine and equipment which are 33% 45%, 15% and 7%. The cost of capital is 11%.
Below are summary cash flow statements for three roughly equal-size companies. Determine each company's cash balance at the end of the year.
How much of the third payment is interest? Do not enter the symbol $ in your answer. Simply enter the answer rounded off to two decimal points.
The firm will not be issuing any new stock. What is Quigley's WACC?
In 1930, the highest paid player in major league baseball was Babe Ruth of the New York Yankees, with an annual salary of $80,000. In 2000, the highest paid player in major league baseball player was Alex Rodriguez, also of the New York Yankees, w..
Your bank offers to lend you $100,000 at an 8.5% annual interest to start your new business. The terms require you to amortize the loan with 10 equal end-of-year payments. How much interest would you be paying in Year 2? Explain.
Rise Above This, Inc., has an average collection period of 64 days. Its average daily investment in receivables is $42,800. Assume 365 days per year.
What is BBB's economic value added (EVA) for the current year?
How would you evaluate the following statement: "A firm can reduce its currency exposure by diversifying across different business lines."
Assume you currently rent an apartment and have an option to buy it for $200,000. Property taxes are $2,000 per year and are deductible for income tax purposes.
Sanai manufacturing company produces and sells 40,000 units of a single product. Variable costs total $80,000 and fixed costs total $120,000. If each unit is sold for $8, what markup percentage is the company using?
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