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market and need a apital of $100,000. SGS can acquire its capital from different sources. It Forrows $55,000 from the bank with an Interest rate of 12% and taxes are 40%; Ssue preferred stocks for $15,000 with a floatation cost for 8% and each referred stock price is 110$ and pays a dividend of 10$ and use the remaining eeded capital from retained earnings, knowing that the common stock of XYZ is urrently trading for 135$. and its earnings growth rate is 5%. If the WACC of SoS

market and need a apital of $100,000. SGS can acquire its capital from different sources. It Forrows $55,000 from the bank with an Interest rate of 12% and taxes are 40%; Ssue preferred stocks for $15,000 with a floatation cost for 8% and each referred stock price is 110$ and pays a dividend of 10$ and use the remaining eeded capital from retained earnings, knowing that the common stock of XYZ is urrently trading for 135$. and its earnings growth rate is 5%. If the WACC of SoS

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Coroporate finance 1. SGS Company needs to introduce a new product to the market and need a capital of $100,000. SGS can acquire its capital from different sources. It Borrows $55,000 from the bank with an Interest rate of 12% and taxes are 40%; Issue preferred stocks for $15,000 with a floatation cost for 8% and each preferred stock price is 110$ and pays a dividend of 10$ and use the remaining needed capital from retained earnings, knowing that the common stock of XYZ is currently trading for 135$. and its earnings growth rate is 5%. If the WACC of SoS is 8.052% then how much is the difference between the dividend paid on preferred stock and the expected dividend paid of common stock (Round to the nearest number) * $10 O S7 $5 $3 None of the above
Transcribed Image Text:Coroporate finance 1. SGS Company needs to introduce a new product to the market and need a capital of $100,000. SGS can acquire its capital from different sources. It Borrows $55,000 from the bank with an Interest rate of 12% and taxes are 40%; Issue preferred stocks for $15,000 with a floatation cost for 8% and each preferred stock price is 110$ and pays a dividend of 10$ and use the remaining needed capital from retained earnings, knowing that the common stock of XYZ is currently trading for 135$. and its earnings growth rate is 5%. If the WACC of SoS is 8.052% then how much is the difference between the dividend paid on preferred stock and the expected dividend paid of common stock (Round to the nearest number) * $10 O S7 $5 $3 None of the above
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