calculate the: -after-tax cost of debt -the cost of preferred stock -the cost of equity from retained earnings using the DCF method -the cost of newly issued common stock using the DCF method

The optimal distribution strategy achieves a balance between capital gains and current dividends in order to raise the stock price of the company. true or false

Describe how preferred dividends affect the calculation of EPS.

The return on equity ratio equals net income divided by common stock. True or False

Match each ratio that follows to its use. Items may be used more than once.

Define each of the following terms:a. Target payout ratio; optimal dividend policyb. Dividend irrelevance theory; bird-in-the-hand fallacyc. Information content (signaling) hypothesis; clienteles; clientele effectd. Catering theory; residual dividend modele. Low-regular-dividend-plus-extrasf. Declaration date; holder-of-record date; ex-dividend date; payment dateg. Dividend reinvestment plan (DRIP)h. Stock split; stock dividendi. Stock repurchase

Return on equity (ROE) using the traditional DuPont formula equals to   A.   (net profit margin) (interest component) (solvency ratio)   B.   (net profit margin) (interest component) (liquidity ratio)   C.   (net profit margin) (total asset turnover) (quick ratio)   D.   (net profit margin) (total asset turnover) (solvency ratio)

Which is not one of the three sources of return for an investor in a common stock? A-debt repurchase B-dividend C-earnings growth d-valuation change

the ratio of dividends per share to earnings per share is known as the dividends yield (T/F)

The income statement of Small Town, Inc. is as shown below: Small Town, Inc. Comparative Income Statement Year Ended December 31, 2025 (In millions) Net Sales Cost of Goods Sold Gross Profit Operating Expenses: O A. 41.89% O B. 60.81% O C. 39.19% O D. 28.38% $ 7,400 2,900 4,500