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NEW QUESTION: 1
A preferred stock is sold for $101 per share, has a face value of $100 per share, underwriting fees of $5
per share, and annual dividends of $10 per share. If the tax rate is 40 percent, the cost of funds (capital)
for the preferred stock is:
A. 6.2 percent.
B. 10.0 percent.
C. 4.2 percent.
D. 10.4 percent.
Answer: D
Explanation:
Choice "d" is correct. The stock is issued for a net of $96 per share ($101 less $5 underwriting fee).
Because preferred stock dividends are not tax deductible, the cost to the company is $10/share (the tax
rate is a distractor). Therefore, the cost of the preferred stock is:
Choices "a", "b", and "c" are incorrect, per the above Explanation:/calculation.
NEW QUESTION: 2
A. Option A
B. Option D
C. Option B
D. Option C
Answer: D
NEW QUESTION: 3
Which of the following best describes an IES?
A. Layer 3 direct Internet access service.
B. Layer 3 IP multipoint-to-multipoint VPN service.
C. Layer 2 point-to-point service.
D. Layer 2 multipoint-to-multipoint service.
Answer: A
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