TKK Co., a firm that has 10,000 preferred outstanding shares, determined its financial break-even point at P540,000. The tax rate applicable to the firm is 50%. The dividend yield for the preferred shares is 25% and these shares are trading at a price of P100. How much is the annual interest paid by TKK Co.?

Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter9: The Cost Of Capital
Section: Chapter Questions
Problem 7P
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TKK Co., a firm that has 10,000 preferred outstanding shares, determined its financial break-even point at P540,000. The tax rate applicable to the firm is 50%. The dividend yield for the preferred shares is 25% and these shares are trading at a price of P100. How much is the annual interest paid by TKK Co.?
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