Question: Topic Covered: Long-term Financing Decisions Notes in answering: 1.Do not round off anytime during the computation. 2. Final answers must be written in percent and

Topic Covered: Long-term Financing Decisions

Notes in answering: 1.Do not round off anytime during the computation. 2. Final answers must be written in percent and rounded to FIVE decimal places.

How much is the cost of the preference shares? * Method: Yield-to-maturity formula Par value 10,000.00 Number of pieces 500.00 Total issuance price 5,250,000.00 Flotation cost (on issue price) 5% Stated rate 7% Term in years 10.00 Total liquidation value 5,200,000.00 Tax Rate 20%

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