Question: johnson and johnsob is concidering a new project with a needed capital of $1,800,000.the company is using only debt and common equity(raised by selling new
johnson and johnsob is concidering a new project with a needed capital of $1,800,000.the company is using only debt and common equity(raised by selling new common stock)as a strategy to manage this capital.part of this capital,which accounts for $720,000,is acquired from the bank at an interest rate of 10%the applicable tax rate is 35%.assuming that flotation is likely to be 6%,the expected dividend received is $4,common stock presently sells for $64 per share,growth rate is 7%and the risk free rate is 5.9%whatis the weight of preffered stock
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