The NCPS company is reconsidering the thesis of preferred shares. The dividend rate is $6 and the nominal value is $50. The price of the knife is $52 and in circulation there are 500,000 AP. Andy Morrison, vice president of finance, feels that the company can emit new AP to the market at an 11% interest rate. At this rate the AP can be sold at face value. The total value of the auctions from the ap sale will be $25m The emission costs are 780,000 and deductible for tax effects, while the price of the knife is not deductible for tax purposes. The tax rate is 30%. A 90-day function period at the time these shares circulate simultaneously for the withdrawal and sale of young people. Should the company make a decision to replace the old Ap with young people?

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The answer is Yest... View the full answer