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NEW QUESTION: 2
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A. 0
B. 1
C. 2
D. 3
Answer: A
NEW QUESTION: 3
The Global Advertising Company had net income after interest but before taxes of $40,000 this year. The marginal tax rate is 40 percent, and the dividend payout ratio is 30 percent. The company can raise debt at a 12 percent interest rate. The last dividend paid by Global was $0.90. Global's common stock is selling for
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A. 12.22%
B. 16.00%
C. 17.22%
D. 9.66%
E. 10.33%
Answer: B
Explanation:
Explanation/Reference:
Explanation:
k(s) (component cost of retained earnings) = $.945/$8.59 + 0.05 = 0.1600 = 16.00%.
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