Company A is considering the issuance of a preferred stock at $200 market price. This preferred stock
Question:
Company A is considering the issuance of a preferred stock at $200 market price. This preferred stock pays a fixed 6% dividend and there is an issuance cost of $6 per share. The par value is $100. The company expects to call the preferred stocks at $160 in 10 years. Based on this information, the cost of raising capital with preferred stocks is:
Statement I:
When earnings are retained and reinvested into non-profitable projects, the company and its earnings will grow in the future.
Statement II:
The general growth model is difficult to apply in practice.
Group of answer choices
Both statements are correct
Both statements are incorrect
Statement 1 is correct; statement 2 is incorrect
Statement 1 is incorrect; statement 2 is correct
Statement 1:
Capital markets are markets for long-term debt instruments.
Capital markets are markets for long term debt instruments.
Statement 2:
Money markets are markets for short-term debt instruments
Group of answer choices
Statement 1 is incorrect; statement 2 is correct
Both statements are incorrect
Statement 1 is correct; statement 2 is incorrect
Both statements are correct
Riverside Safari Resort has recently purchased 5 luxury SUV's for US$ 55,000 each (including taxes etc.). These cars will be depreciated in four years using the straight-line depreciation method. The book value of these vehicles at the end of the third year is together US$ $27,000. Based on this information, the annual depreciation of these vehicles will be:
Group of answer choices
$62,000
$55,000
$68,750
$62,500