Business, 12.08.2020 04:01 maddyhayes

The treasurer of Riley Coal Co. is asked to compute the cost of fixed income securities for her corporation. Even before making the calculations, she assumes the aftertax cost of debt is at least 3 percent less than that for preferred stock. Debt can be issued at a yield of 11.0 percent, and the corporate tax rate is 20 percent. Preferred stock will be priced at $60 and pay a dividend of $6.40. The flotation cost on the preferred stock is $6.

a. Compute the aftertax cost of debt. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
b. Compute the aftertax cost of preferred stock. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
c. Based on the facts given above, is the treasurer correct?

Answers: 1

Show answers

Other questions on the subject: Business

Business, 21.06.2019 16:10, KpopSushi

Which one of the following is most apt to align management's priorities with shareholders' interests? compensating managers with shares of stock that must be held for a minimum of three years holding corporate and shareholder meetings at high-end resort-type locations preferred by managers increasing the number of paid holidays that long-term employees are entitled to receive allowing employees to retire early with full retirement benefits paying a special management bonus on every fifth year of employment

Answers: 1

continue

Business, 22.06.2019 01:30, Arealbot

The strength of the economy depends on the balance pf production and consumption of goods and consumption of goods and services

Answers: 1

continue

Business, 22.06.2019 20:30, andrejr0330jr

Exercise 7-7 martinez company reports the following financial information before adjustments. dr. cr. accounts receivable $168,900 allowance for doubtful accounts $3,200 sales revenue (all on credit) 849,300 sales returns and allowances 50,440 prepare the journal entry to record bad debt expense assuming martinez company estimates bad debts at (a) 4% of accounts receivable and (b) 4% of accounts receivable but allowance for doubtful accounts had a $1,550 debit balance. (if no entry is required, select "no entry" for the account titles and enter 0 for the amounts. credit account titles are automatically indented when the amount is entered. do not indent manually.)

Answers: 3

continue

Business, 22.06.2019 23:30, glissman8459

What is the difference between career options in the law enforcement pathway and career options in the correction services pathway?

Answers: 1

continue

You know the right answer?

The treasurer of Riley Coal Co. is asked to compute the cost of fixed income securities for her corp...