Cartman Enterprises using these parameters and NOT the ones in the example. Study the example to learn how to manipulate these numbers to reach your answer of the cost of capital:

1. Cartman Enterprises will raise $3 million by selling preferred stock
2. Par value is set at $100
3. Annual dividend rate is 5%
4. Single share of preferred stock is currently selling for $24
5. The flotation cost is $2 per share
6. What is Cartmans cost of capital? ____________________________

Should retained earnings reinvested in your company (American Pretzel and Cupcake Company) have a zero cost of capital because it generates the funds internally and the company does not need to pay itself for borrowing money? If not, why? ion.

1. why selecting a beta for a project is more of an art than a science. Identify your project and plan.
2. In a pro forma income statement, why would a finance manager such as yourself make changes in the prior years percentages for different line items? Give an example of two-line items that you would expect to vary in percentage every year as sales forecasts grow and tell why you came to these conclusions.