A firm’s preferred stock currently sells for $90 per share and pays a dividend of $9 per share.  However, the firm will only receive $85 per share from the sale of new preferred stock due to the floatation costs. What’s the firm’s component cost of Preferred stock?     10.6%     10.9%     11.8%     10.0%

The stock of North American Danduff Company is selling at $80 per share. The firm pays a divdend of $2.50 per share.  a) What is the dividend yield? b) If the firm has a payout rate of 50% , what is the firm's P/E ratio?

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The expected pretax return on three stocks is divided between dividends and capital gains in the following way:   Stock Expected Dividend Expected Capital Gain A $0 $10 B 5 5 C 10 0     Required: a. If each stock is priced at $110, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is 6.3%), and (iii) an individual with an effective tax rate of 15% on dividends and 10% on capital gains? b. Suppose that investors pay 50% tax on dividends and 20% tax on capital gains. If stocks are priced to yield an after-tax return of 8%, what would A, B, and C each sell for? Assume the expected dividend is a level perpetuity. Req A Req B If each stock is priced at $110, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21% (the effective…

A $60 par value preferred stock has a stated dividend of 6%, with a market price of $70. The company plans on raising cash in the market by selling more of the same preferred stock and investment bankers charge the company a 5% fee for selling it. The company’s stated tax rate is 25%. A. Calculate the before-tax cost of preferred stock to the company. B. Calculate the cost of preferred stock to the company after taxes.