Reason for issue of common stock. Introduction: Common stock refers to a type of security which has ownership rights too. Common stockholders are the owners of the company. Common stock consists of highest risk among the securities issued by a company.

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Answer 1

Question

Chapter 14, Problem 14.1PQ1

Summary Introduction

To determine:

Reason for issue of common stock.

Introduction: Common stock refers to a type of security which has ownership rights too. Common stockholders are the owners of the company. Common stock consists of highest risk among the securities issued by a company.

Expert Solution & Answer

Answer to Problem 14.1PQ1

Solution:

Company issue common stock to raise capital and they prefer to issue common stock because they don’t have to give principal amount back and dividend is not mandatory.

Explanation of Solution

Company issue common stock because they want to raise capital to run company. They prefer financing from common stock because of these reasons,

No repayment of principal amount: While issuing the common stocks, a company doesn’t have to pay back the principal amount in future that they received from common stockholders.
Dividend not mandatory: The other reason for the issue of common stock is that they don’t have to give a dividend every year to shareholder. They can give dividend whenever they want. Although company tries to give dividend regularly to maintain its goodwill.

Hence, company likes to issue common stock because of the benefit of not paying principal amount back and dividend is not mandatory.

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Pam and Jim are saving money for their two children who they plan to send to university.The eldest child will enter university in 5 years while the younger will enter in 7 years. Each child is expected spend four years at university. University fees are currently R20 000 per year and are expected to grow at 5% per year. These fees are paid at the beginning of each year.Pam and Jim currently have R40 000 in their savings and their plan is to save a fixed amount each year for the next 5 years. The first deposit taking place at the end of the current year and the last deposit at the date the first university fees are paid.Pam and Jim expect to earn 10% per year on their investments.What amount should they invest each year to meet the cost of their children’s university fees?

Answer 2

Question

Chapter 14, Problem 14.1PQ1

Summary Introduction

To determine:

Reason for issue of common stock.

Introduction: Common stock refers to a type of security which has ownership rights too. Common stockholders are the owners of the company. Common stock consists of highest risk among the securities issued by a company.

Expert Solution & Answer

Answer to Problem 14.1PQ1

Solution:

Company issue common stock to raise capital and they prefer to issue common stock because they don’t have to give principal amount back and dividend is not mandatory.

Explanation of Solution

Company issue common stock because they want to raise capital to run company. They prefer financing from common stock because of these reasons,

No repayment of principal amount: While issuing the common stocks, a company doesn’t have to pay back the principal amount in future that they received from common stockholders.
Dividend not mandatory: The other reason for the issue of common stock is that they don’t have to give a dividend every year to shareholder. They can give dividend whenever they want. Although company tries to give dividend regularly to maintain its goodwill.

Hence, company likes to issue common stock because of the benefit of not paying principal amount back and dividend is not mandatory.

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Answer 3

Question

Chapter 14, Problem 14.1PQ1

Summary Introduction

To determine:

Reason for issue of common stock.

Introduction: Common stock refers to a type of security which has ownership rights too. Common stockholders are the owners of the company. Common stock consists of highest risk among the securities issued by a company.

Expert Solution & Answer

Answer to Problem 14.1PQ1

Solution:

Company issue common stock to raise capital and they prefer to issue common stock because they don’t have to give principal amount back and dividend is not mandatory.

Explanation of Solution

Company issue common stock because they want to raise capital to run company. They prefer financing from common stock because of these reasons,

No repayment of principal amount: While issuing the common stocks, a company doesn’t have to pay back the principal amount in future that they received from common stockholders.
Dividend not mandatory: The other reason for the issue of common stock is that they don’t have to give a dividend every year to shareholder. They can give dividend whenever they want. Although company tries to give dividend regularly to maintain its goodwill.

Hence, company likes to issue common stock because of the benefit of not paying principal amount back and dividend is not mandatory.

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Answer 4

Question

Chapter 14, Problem 14.1PQ1

Summary Introduction

To determine:

Reason for issue of common stock.

Introduction: Common stock refers to a type of security which has ownership rights too. Common stockholders are the owners of the company. Common stock consists of highest risk among the securities issued by a company.

Expert Solution & Answer

Answer to Problem 14.1PQ1

Solution:

Company issue common stock to raise capital and they prefer to issue common stock because they don’t have to give principal amount back and dividend is not mandatory.

Explanation of Solution

Company issue common stock because they want to raise capital to run company. They prefer financing from common stock because of these reasons,

No repayment of principal amount: While issuing the common stocks, a company doesn’t have to pay back the principal amount in future that they received from common stockholders.
Dividend not mandatory: The other reason for the issue of common stock is that they don’t have to give a dividend every year to shareholder. They can give dividend whenever they want. Although company tries to give dividend regularly to maintain its goodwill.

Hence, company likes to issue common stock because of the benefit of not paying principal amount back and dividend is not mandatory.

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Answer 5

Chapter 14, Problem 14.1PQ1

Summary Introduction

To determine:

Reason for issue of common stock.

Introduction: Common stock refers to a type of security which has ownership rights too. Common stockholders are the owners of the company. Common stock consists of highest risk among the securities issued by a company.

Expert Solution & Answer

Answer to Problem 14.1PQ1

Solution:

Company issue common stock to raise capital and they prefer to issue common stock because they don’t have to give principal amount back and dividend is not mandatory.

Explanation of Solution

Company issue common stock because they want to raise capital to run company. They prefer financing from common stock because of these reasons,

No repayment of principal amount: While issuing the common stocks, a company doesn’t have to pay back the principal amount in future that they received from common stockholders.
Dividend not mandatory: The other reason for the issue of common stock is that they don’t have to give a dividend every year to shareholder. They can give dividend whenever they want. Although company tries to give dividend regularly to maintain its goodwill.

Hence, company likes to issue common stock because of the benefit of not paying principal amount back and dividend is not mandatory.

Answer 6

Chapter 14, Problem 14.1PQ1

Summary Introduction

To determine:

Reason for issue of common stock.

Introduction: Common stock refers to a type of security which has ownership rights too. Common stockholders are the owners of the company. Common stock consists of highest risk among the securities issued by a company.

Expert Solution & Answer

Answer to Problem 14.1PQ1

Solution:

Company issue common stock to raise capital and they prefer to issue common stock because they don’t have to give principal amount back and dividend is not mandatory.

Explanation of Solution

Company issue common stock because they want to raise capital to run company. They prefer financing from common stock because of these reasons,

No repayment of principal amount: While issuing the common stocks, a company doesn’t have to pay back the principal amount in future that they received from common stockholders.
Dividend not mandatory: The other reason for the issue of common stock is that they don’t have to give a dividend every year to shareholder. They can give dividend whenever they want. Although company tries to give dividend regularly to maintain its goodwill.

Hence, company likes to issue common stock because of the benefit of not paying principal amount back and dividend is not mandatory.

Answer 7

Chapter 14, Problem 14.1PQ1

Summary Introduction

To determine:

Reason for issue of common stock.

Introduction: Common stock refers to a type of security which has ownership rights too. Common stockholders are the owners of the company. Common stock consists of highest risk among the securities issued by a company.

Answer 8

Expert Solution & Answer

Answer to Problem 14.1PQ1

Solution:

Company issue common stock to raise capital and they prefer to issue common stock because they don’t have to give principal amount back and dividend is not mandatory.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Company issue common stock because they want to raise capital to run company. They prefer financing from common stock because of these reasons,

No repayment of principal amount: While issuing the common stocks, a company doesn’t have to pay back the principal amount in future that they received from common stockholders.
Dividend not mandatory: The other reason for the issue of common stock is that they don’t have to give a dividend every year to shareholder. They can give dividend whenever they want. Although company tries to give dividend regularly to maintain its goodwill.

Hence, company likes to issue common stock because of the benefit of not paying principal amount back and dividend is not mandatory.

Answer 12

Ch. 14 - Prob. 14.1PQ1 Ch. 14 - Prob. 14.1PQ2 Ch. 14 - Prob. 14.1PQ3 Ch. 14 - Prob. 14.1PQ4 Ch. 14 - Prob. 14.2PQ1 Ch. 14 - Prob. 14.2PQ2 Ch. 14 - Prob. 14.2PQ3 Ch. 14 - Prob. 14.3PQ1 Ch. 14 - Prob. 14.3PQ2 Ch. 14 - Prob. 14.3PQ3

Reason for issue of common stock. Introduction: Common stock refers to a type of security which has ownership rights too. Common stockholders are the owners of the company. Common stock consists of highest risk among the securities issued by a company.

To determine: Reason for issue of common stock. Introduction: Common stock refers to a type of security which has ownership rights too. Common stockholders are the owners of the company. Common stock consists of highest risk among the securities issued by a company.

Answer to Problem 14.1PQ1

Explanation of Solution

Want to see more full solutions like this?

Chapter 14 Solutions

To determine:

Reason for issue of common stock.

Introduction: Common stock refers to a type of security which has ownership rights too. Common stockholders are the owners of the company. Common stock consists of highest risk among the securities issued by a company.