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5. Cost of new common stock A firm needs to take flotation costs into account when it is raising capital from True or False: The

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5. Cost of new common stock A firm needs to take flotation costs into account when it is raising capital from True or False: The following statement accurately describes how firms make decisions related to issuing new common stock. Taking flotation costs into account will reduce the cost of new common stock. O True: Taking flotation costs into account will reduce the cost of new common stock, because you will multiply the cost of new common stock by 1 minus the flotation cost-similar to how the after-tax cost of debt is calculated. O False: Flotation costs are additional costs associated with raising new common stock. Cute Camel Woodcraft Company is considering a one-year project that requires an initial investment of $400,000; however, in raising this capital, Cute Camel will incur an additional flotation cost of 3%. At the end of the year, the project is expected to produce a cash inflow of $480,000. The rate of return that Cute Camel expects to earn on the project after its flotation costs are taken into account is Cute Camel has a current stock price of $22.35 and is expected to pay a dividend of $1.36 at the end of next year. The mpany's growth rate is expected to remain constant at 10%. If the issue's flotation costs are expected to equal 3% of the funds raised, the flotation-cost-adjusted cost of the firm's new common stock is Cute Camel's addition to earnings for this year is expected to be $420,000. Its target capital structure consists of 40% debt, 5% preferred stock, and 55% common stock. Cute Camel Woodcraft Company's retained earnings breakpoint is (rounded to the nearest whole dollar). Grade It Now Save & Continue Continue without saving eep the Highest: 1/5 to account when it is raising capital from at accurately describes how firms make dissuing new common stock common stock. il reduce the cost of new common stock. retained earnings es into account will reduce the cost of new common stock, because you will multiply the cost of new com tion cost-similar to how the after-tax cost of debt is calculated. additional costs associated with raising new common stock. considering a one-year project that requires an initial investment of $400,000; however, in raising this ca Flotation cost of 3%. At the end of the year, the project is expected to produce a cash inflow of $480,000. earn on the project after its flotation costs are taken into account is ce of $22.35 and is expected to pay a dividend of $1.36 at the end of next year. The company's growth rat. %. If the issue's flotation costs are expected to equal 3% of the funds raised, the flotation-cost-adjusted co for this year is expected to be $420,000. Its target capital structure consists of 40% debt, 5% preferred stoc Woodcraft Company's retained earnings breakpoint is (rounded to the nearest whole dollar Grade It Now Save & Continu Continue without se 5. Cost of new common stock A firm needs to take flotation costs into account when it is raising capital from True or False: The following statement accurately describes how firms make decisions related issuing new common stock. Taking flotation costs into account will reduce the cost of new common stock. O True: Taking flotation costs into account will reduce the cost of new common stock, because you will multiply the cost of new commor stock by 1 minus the flotation cost-similar to how the after-tax cost of debt is calculated. O False: Flotation costs are additional costs associated with raising new common stock. Cute Camel Woodcraft Company is considering a one-year project that requires an initial investment of $400,000; however, in raising this capita Cute Camel will incur an additional flotation cost of 3%. At the end of the year, the project is expected to produce a cash inflow of $480,000. The of return that Cute Camel expects to earn on the project after its flotation costs are taken into account is 13.20% Cute Camel has a current stock price of $22.35 and is expected to pay a dividend of $1.36 at the end of the company's growth rate is expected to remain constant at 10%. If the issue's flotation costs are expected to equal 3% of the funds 10.73% rotation-cost-adjusted cost firm's new common stock is 9.90% Cute Camel's addition to earnings for this year is expected to be $420,000. Its target capital structure cor 16.50% % debt, 5% preferred stock, 55% common stock. Cute Camel Woodcraft Company's retained earnings breakpoint is Trounded to the nearest whole dollar). Grade It Now Save & Continue Continue without sav 5. Cost of new common stock A firm needs to take flotation costs into account when it is raising capital from True or False: The following statement accurately describes how firms make decisions related to issuing new common stock. Taking flotation costs into account will reduce the cost of new common stock. O True: Taking flotation costs into account will reduce the cost of new common stock, because you will multiply the cost of stock by 1 minus the flotation cost-similar to how the after-tax cost of debt is calculated. O False: Flotation costs are additional costs associated with raising new common stock. Cute Camel Woodcraft Com 13.02% sidering a one-year project that requires an initial investment of $400,000; however, in raisi Cute Camel will incur an add btion cost of 3%. At the end of the year, the project is expected to produce a cash inflow of 13.83% of return that Cute Camel ex urn on the project after its flotation costs are taken into account is 16.10% Cute Camel has a current sta $22.35 and is expected to pay a dividend of $1.36 at the end of next year. The company's 16.27% expected to remain constant the issue's flotation costs are expected to equal 3% of the funds raised, the flotation-cost- firm's new common stock is Cute Camel's addition to earnings for this year is expected to be $420,000. Its target capital structure consists of 40% debt, 5% po 55% common stock. Cute Camel Woodcraft Company's retained earnings breakpoint is (rounded to the nearest Grade It Now Sau Contir 5. Cost of new common stock A firm needs to take flotation costs into account when it is raising capital from True or False: The following statement accurately describes how firms make decisions related to issuing new common stock. Taking flotation costs into account will reduce the cost of new common stock. O True: Taking flotation costs into account will reduce the cost of new common stock, because you will multiply the cost of new common stock by 1 minus the flotation cost-similar to how the after-tax cost of debt is calculated. False: Flotation costs are additional costs associated with raising new common stock. Cute Camel Woodcraft Company is considering a one-year project that requires an initial investment of $400,000; however, in raising this capital, Cute Camel will incur an additional flotation cost of 3%. At the end of the year, the project is expected to produce a cash inflow of $480,000. The of return that Cute Camel expects to earn on the project after its flotation costs are taken into account is $954,545 Cute Camel has a current stock price of $22.35 and is expected to pay a dividend of $1 of next year. The company's growth rate is $878,181 expected to remain constant at 10%. If the issue's flotation costs are expected to equa ds raised, the flotation-cost-adjusted cost of firm's new common stock is $763,636 $1,050,000 Cute Camel's addition to earnings for this year is expected to be $420,000. Its target ca 55% common stock. Cute Camel Woodcraft Company's retained earnings breakpoint is consists of 40% debt, 5% preferred stock, am (rounded to the nearest whole dollar). Grade It Now Save & Continue Continue without saving

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