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

L. Sanders Manufacturing paid a dividend last year of $5 per share. The dividend is expected to grow at a constant rate of 8% per year. The price of L. Sanders Manufacturing's stock today is $29 per share. If L. Sandaers Manufacturing decides to issue new common stock, flotation costs will equal $2.50 per share. Based on the above information, the cost of new common stock is OA. 28.38%. OB. 31.40%. OC. 26.62%. OD. 24.12%. OE. None of the above.
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
Sarah Co. just paid $2.10 dividend. If the stock is selling for $30, at what rate the company's dividend must grow for you to meet the required rate of return of 13.7%?
No-Growth Industries pays out all of its earnings as dividends. It will pay its next $6 per share dividend in a year. The discount rate is 21%. a. What is the price-earnings ratio of the company? b. What would the P/E ratio be if the discount rate were 20%?
Am. 362.
am. 104.
Abercrombie & Fitch's common stock pays a dividend of $3.00. It is currently selling for $30.78. If the firm's investors require a return of 15 percent on their investment from buying Abercrombie & Fitch stock, what growth rate would Abercrombie & Fitch have to provide the investors?
Blue Corp. is evaluating an extra dividend versus a share repurchase. In either case, $5,500 would be spent. Current earnings are $1.11 per share and the stock currently sells for $42 per share. There are 2,500 shares outstanding. Ignore taxes and other imperfections. If Blue Corp. pays a dividend, what will be the dividend per share? After the dividend is paid, how many shares will be outstanding and what will the price per share be? Enter your answers rounded to 2 DECIMAL PLACES. NOTE: Fractional shares are possible (Ex. 0.49 shares) Dividend 2.2 ☑ Correct response: 2.2±0.01 Shares outstanding = 2500 Correct response: 2,500 Stock price = 39.8 Correct response: 39.8±0.01 Click "Verify" to proceed to the next part of the question. After the $2.2 dividend, the price falls to $39.8 per share. What are earnings per share (EPS) and the price earnings (P/E) ratio? Enter your answers rounded to 2 DECIMAL PLACES. EPS = Number P/E RatioNumber Click "Verify" to proceed to the next part of the…
Ef 104.
Boulangerie de Patisserie stock is currently trading for €48 per share and is planning to pay a €4 special dividend. Suppose that capital gains are taxed at a 20% and dividends are taxed at 35%. What is the company's expected ex-dividend stock price?
Wyatt Oil pays a regular dividend of $2.0 per share. Typically, the stock price drops by $2.20 per share when the stock goes ex-dividend. Suppose the capital gains tax rate is 24%, but investors pay different tax rates on dividends. Absent transactions cost, the highest dividend tax rate of an investor who could gain from trading to capture the dividend is closest to (%) (2 decimal places):
A $60 par value preferred stock has a stated dividend of 6%, with a market price of $70. The company plans on raising cash in the market by selling more of the same preferred stock and investment bankers charge the company a 5% fee for selling it. The company’s stated tax rate is 25%. A. Calculate the before-tax cost of preferred stock to the company. B. Calculate the cost of preferred stock to the company after taxes.