Mountaintop Market is offering 60,000 shares of stock to the public in a general cash offer. The offer price is $30 a share and the underwriter's spread is 9 percent. The administrative costs are estimated at $310,000. How much will Hilltop Market receive from this stock offering assuming the issue is completely sold?

$1,370,800
$1,328,000
$1,490,000
$1,638,000
$1,800,000

A firm has a cost of equity of 13 percent, a cost of preferred of 11 percent, and an after tax cost of debt of 6 percent. Given this, which one of the following will increase the firm's weighted average cost of capital?

Increasing the firm's tax rate
Issuing new bonds at par
Redeeming shares of common stock
Increasing the firm's beta
Increasing the debt-equity ratio

Madison Square Stores has a $20 million bond issue outstanding that currently has a market value of $18.6 million. The bonds mature in 6.5 years and pay semiannual interest payments of $35 each. What is the firm's pretax cost of debt?

4.21 percent
8.42 percent
7.58 percent
7.74 percent
7.80 percent

Which one of the following correctly states a qualification an issuer must meet to be qualified to use Rule 415 for shelf registration?

The issuer must never have defaulted on its debt.
The issuer must have outstanding stock with a market value in excess of $250 million.
The issuer must never have violated the Securities Act of 1934.
The issuer must have an investment grade rating.
The issuer cannot have defaulted on its debt within the past five years.

The cost of preferred stock:

increases when a firm's tax rate decreases.

is constant over time.
is unaffected by changes in the market price.
is equal to the stock's dividend yield.
increases as the price of the stock increases.