Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Gem Systems has recently issued preferred stock. The stock has a 12% annual dividend based on a par value of $100 per share. The stock is currently selling for $97.50 per share in the secondary market (so that Po = $97.50). Finally, flotation costs of $2.50 must be paid for each new share Gem Systems issues.

(a) find out the cost of preferred stock based on the outstanding issue, given the current market price.

(b) If Gem Systems sells a new issue of preferred stock carrying a par value of $100 but with an annual dividend of 10% of par, what is the cost of this newly issued preferred stock if the firm nets $90.00 per share after flotation costs?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M943381

Have any Question? 


Related Questions in Basic Finance

1 what forces have been driving the increased

1. What forces have been driving the increased internationalization of business? 2. Explain the different orientations to international business that can be found among executives. 3. What are the various situations in w ...

Which financial variable must be multiplied by the net

Which financial variable must be multiplied by the net profit margin ratio in order to calculate the return on assets ratio? What is the numerical value of the debt ratio if the debt-to-equity ratio is equal to 4?

1 why is specialization so critical to distribution

1. Why is specialization so critical to distribution efficiency? 2. Describe how the process of assortment overcomes the problems created by specialization. 3. Given the principle of minimum transactions, explain why it ...

1 describe in your own words the techniques that scientists

1. Describe in your own words the techniques that scientists use to help them avoid drawing statistically invalid conclusions. 2. What is a statistically significant result? What is the relationship among statistical sig ...

What primary factors determine the number of load cycles

What primary factors determine the number of load cycles required to break a bolt subject to fatigue loading? Describe the appearance of the break surface of a bolt which has failed in fatigue ? Where on a bolt are you m ...

1 what is the economic rationale for the cost approach

1. What is the economic rationale for the cost approach? Under what conditions would the cost approach tend to give the best value estimate? 2. What is the economic rationale for the sales comparison approach? What infor ...

Use the internet and or strayer resource center to

Use the Internet and / or Strayer Resource Center to research career options within the field of finance. Consider the Bureau of Labor Statistics Website, and the Websites of finance professional associations such as the ...

1 why do researchers use factor analysis2 imagine that you

1. Why do researchers use factor analysis? 2. Imagine that you conducted a factor analysis on a set of variables that were uncorrelated with one another. How many factors would you expect to find? Why?

Information for next four questions the nullcom inc is

Information for next four questions: The Nullcom Inc. is considering to purchase a new machine. The cost of the machine is $200,000 and installation of $10,000. The machine will be depreciated straight-line to zero. The ...

1 why did herman wouters resign2 what is the international

1. Why did Herman Wouters resign? 2. What is the international strategy of StarUSA? 3. How has StarUSA's development affected its HR function?

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen