this is 1 question, please answer asap, due soon
True or False: The following statement accurately descnbes how firms make decisions related to issuing new common stock. The cost of issuing new common stock is calculated the same way as the cost of ratsing equity capital from retained earnings. False: Flotation costs need to be taken into account when calculating the cost of issuing new common stock, but they do not need to be taken into account when raising capital from retained eamings. True: The cost of recained earnings and the cost of new common stock are calculated in the same mannec, except that the cost of retained earnings is bused on the firm's existing common equity, while the cost of new common stock is based on the value of the firm's share price net of its flotation cost. White Lion Homebulders is considering investing in a one-year project that requires on intral investrient of 5500,000 . To do so, it will have to issuet new cammon stock and wal incur a flototion cost of 2.00%. At the end of the yexc, the project is expected to produce a cosh inflow of $595,000. The rate of return that White Lion expects to earn on its project (net of its flotation costs) is (rounded to two decimal places). Aloha Moose Transporters has a current stock price of $22.35 per share, and is expected to pay a per-share dividend of $2.03 at the end af the year. The company's carnings' and dividends' growth rote are expected to grow at the constant rate of 8.70% into the foreseeable future. If Alpha Mcose expects to ineur flotation costs of 3.750% of the value of its newly-raised equiky funds, then the flotation-adjusted (net) cost of its new common stock (rounded to two decimal pilotes) shoula be White Lion Homebuilders Co.'s addition to earnings for this year is expected to be 5745,000 . Tts target capital structure consists of 409 debt, 5 \% preferred, and 55% equity, Determine White Lion Homebualders's retained earnings breakpoint: 51,693,181 51,490,000 51,354,543 51,422,272 The Whce is used as the discount rate to evaluste various capital brodgeting projects, However, it if iniportant fe realite that the WACe is ain aporeptiate difcount rate caly for a projed of average risk. Conslder the cawe of Turnbull Co. It costed preferred stock is 12,26. commen equary, it will carry a cost of 16,014 . decimat places.) 144sin b. 414 tigethe 0 the Turnbuif Co. is conssidereng a project that reguires an intial investment of $1,708,000. The firm will raise the 51,709,000 in copital by issaing $750,000 rate of 2594. What will be the WaCC for this project? (Note: Round yout intermediate cacistations to three decimai places.) Consiffer the case of Kuth Co. Wotin ca. a convacring a new project that wif require in initial investment of 520 milion. It has a target copital structure of sa\% debt, ch preferred. wod. and 36m common equity. Kohn has noncallable bonds cutstanding that mature in tive years with a face value of $1,000, an amuat coupon rate of 104, and st market price of \$1,050.76. The yeld on the companys current bonds is a pood approximation of the yield on any new bends that it twesc. The compaty can sell thares of preferred stock that poy an annual dividend of 58 at a price of $95.70 per share. than of 25\&, what with be the wace for thes project
