What is the switch break-even point if the firm switched

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Reference no: EM131917179

1. A firm has just paid its annual dividend of $5.64 a share. Thereafter the dividend is expected to increase at a rate of 2% a year. If the firm's stock currently sells for $60 a share, what is the cost of equity?

A. 11.59%

B. 14.33%

C. 11.40%

D. 9.40%

2. Preston Milled Products currently sells a product with a variable cost per unit of $26 and a unit selling price of $47. At the present time, the firm only sells on a cash basis with monthly sales of 330 units. The monthly interest rate is 1.2 percent. What is the switch break-even point if the firm switched to a net 30 credit policy? Assume the selling price per unit and the variable costs per unit remain constant.

342 units

339 units

343 units

344 units

346 units

Reference no: EM131917179

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