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NEW QUESTION: 1
Rollins Corporation is constructing its MCC (marginal cost of capital) schedule. Its target capital structure is
20 percent debt, 20 percent preferred stock, and 60 percent common equity. Its bonds have a 12percent coupon, paid semiannually, a current maturity of 20 years, and sell for $1,000. The firm could sell, at par,
$100 preferred stock, which pays a 12 percent annual dividend, but flotation costs of 5 percent would be incurred. Rollins' beta is 1.2, the risk-free rate is 10 percent, and the market risk premium is 5 percent.
Rollins is a constant growth firm, which just paid a dividend of $2.00, sells for $27.00 per share, and has a growth rate of 8 percent. The firm's policy is to use a risk premium of 4 percentage points when using the bond-yield-plus-risk-premium method to find k(s) (component cost of retained earnings). The firm's net income is expected to be $1 million, and its dividend payout ratio is 40 percent. Flotation costs on new common stock total 10 percent, and the firm's marginal tax rate is 40 percent. What is Rollins' cost of retained earnings using the CAPM (Capital Asset Pricing Model) approach?
A. 13.6%
B. 16.9%
C. 16.6%
D. 14.1%
E. 16.0%
Answer: E
Explanation:
Explanation/Reference:
Explanation:
Cost of retained earnings (CAPM approach): k(s) (component cost of retained earnings) = 10% + 1.2(5%)
= 16.0%.
NEW QUESTION: 2
A. Option D
B. Option A
C. Option B
D. Option C
Answer: A
NEW QUESTION: 3
After a user prepares and sends an encrypted message to a recipient, what is the next step?
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C. The email is forwarded to new users to be authenticated.
D. The encryption key is stored in the Cisco ESA servers.
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Answer: A
NEW QUESTION: 4
Identify the gateway type that disallows an outgoing conditional path.
A. Complex
B. Parallel
C. Exclusive
D. Inclusive
Answer: B
Explanation:
A Parallel Gateway creates parallel paths without checking any conditions; each outgoing Sequence Flow receives a token upon execution of this Gateway
Reference:http://training-coursematerial.com/training/BPMN_2.0_Gateways#Parallel_Gateway(See Parallel Gateway, 2ndline).
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