Question

A. A $1,000 par value bond with a market price of $975 and a coupon interest rate of 7 percent. Flotation costs for a new issue would be approximately 6 percent. The bonds mature in 14 years and the corporate tax rate is 36 percent.

b. A preferred stock selling for $116 with an annual dividend payment of $12. The flotation cost will be $6 per share. The​company's marginal tax rate is 30 percent.
c. Retained earnings totaling $4.8 million. The price of the common stock is $67 per​ share, and dividend per share was $8.42 last year. The dividend is not expected to change in the future.
d. New common stock when the most recent dividend was $3.17. The​ company's dividends per share should continue to increase at a growth rate of 8 percent into the indefinite future. The market price of the stock is currently $55​; ​however, flotation costs of $ 9 per share are expected if the new stock is issued.

Answer 1

b

Step-by-step explanation:

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