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

Answer rating: 100% (QA)

Capital markets are markets where long term debt and equity s... View the full answer