Diggin Tools just issued new preferred stock, which sold for P85 in the stock markets. Holders of the stock will receive an annual dividend equal to P9.35. The flotation costs associated with the new issue were 6 percent and Diggin's marginal tax rate is 30 percent. What is Diggins cost of preferred stock, kps?

Diggin Tools just issued new preferred stock, which sold for P85 in the stock markets. Holders of the stock will receive an annual dividend equal to P9.35. The flotation costs associated with the new issue were 6 percent and Diggin's marginal tax rate is 30 percent. What is Diggins cost of preferred stock, kps?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Easttown Productions just paid an annual dividend of $7.85 per share. Future dividends are expected to increase by 2 percent annually. What is one share of this stock worth at a required rate of return of 12.25 percent? A. $78.12 B. $100.88 C. $95.02 D. $76.59 E. $64.08
Incom Corporation's most recent dividend D0 was $1.8, and thanks to their exclusive contract to manufacture and T-65B's, they anticipate constant growth at a rate of 4.3 percent into the future. Assuming you won't pay more per share than a stock is worth, what is the fair value of the stock if the required return (rs) = 10.2 percent?
Barton Industries expects next year's annual dividend, D1, to be $2.30 and it expects dividends to grow at a constant rate g = 4.9%. The firm's current common stock price, P0, is $25.00. If it needs to issue new common stock, the firm will encounter a 4.5% flotation cost, F. What is the flotation cost adjustment that must be added to its cost of retained earnings? Do not round intermediate calculations. Round your answer to two decimal places. _____% What is the cost of new common equity considering the estimate made from the three estimation methodologies? Do not round intermediate calculations. Round your answer to two decimal places. _____%
Am. 362.
Barton Industries can issue perpetual preferred stock at a price of $44 per share. The stock would pay a constant annual dividend of $3.20 per share. If the firm's marginal tax rate is 25%, what is the company's cost of preferred stock? Round your answer to two decimal places.
d. Patah Hati Berhad's common stock is selling for RM22.00 per share. The last dividend was RM1.20, and dividends are expected to grow at a 6% annual rate. Flotation costs on new stock sales are 5% of the selling price. Compute the cost of Patah Hati Berhad's new common stock.
Travis Industries plans to issue perpetual preferred stock with an $11.00 dividend. The stock is currently selling for $90.50, but flotation costs will be 7% of the market price, so the net price will be $84.17 per share. What is the cost of the preferred stock, including flotation? Round your answer to two decimal places. %
Ef 104.
Travis Industries plans to issue perpetual preferred stock with an $11.00 dividend. The stock is currently selling for $95.00, but flotation costs will be 10% of the market price, so the net price will be $85.50 per share. What is the cost of the preferred stock, including flotation? Round your answer to two decimal places. %
Travis Industries plans to issue perpetual preferred stock with an $11.00 dividend. The stock is currently selling for $88.00, but flotation costs will be 8% of the market price, so the net price will be $80.96 per share. What is the cost of the preferred stock, including flotation? Round your answer to two decimal places.
A. Torch Industries can issue perpetual preferred stock at a price of $55.00 a share. The stock would pay a constant annual dividend of $4.50 a share. What is the company's cost of preferred stock, rp? Round your answer to two decimal places. = %_______ B. The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 15%, its before-tax cost of debt is 8%, and its marginal tax rate is 25%. Assume that the firm's long-term debt sells at par value. The firm’s total debt, which is the sum of the company’s short-term debt and long-term debt, equals $1,180. The firm has 576 shares of common stock outstanding that sell for $4.00 per share. Assets Liabilities And Equity Cash $ 120 Accounts payable and accruals $ 10 Accounts receivable 240 Short-term debt 60 Inventories 360 Long-term debt 1,120 Plant and equipment, net 2,160 Common equity 1,690 Total assets $2,880 Total liabilities and equity $2,880 Calculate Paulson's WACC using…
Lala Ltd's stock is currently selling for $5 per share. Lala Ltd paid $0.5 dividend and has growth rate of 10%. If the required rate of return on this stock were 10%, calculate the stock's fair price and also the dividend yield for the stock at the price.