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| Teaching Since: | May 2017 |
| Last Sign in: | 398 Weeks Ago, 3 Days Ago |
| Questions Answered: | 66690 |
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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
1. Fuzzy Button Clothing Company is considering a one-year project that requires an initial investment of $600,000; however, in raising this capital, Fuzzy Button will incur an additional flotation cost of 5%. At the end of the year, the project is expected to produce a cash inflow of $900,000. The rate of return that Fuzzy Button expects to earn on the project after its flotation costs are taken into account is _________.
2. Fuzzy Button has a current stock price of $22.35 and is expected to pay a dividend of $2.45 at the end of next year. The companyAc€?cs growth rate is expected to remain constant at 4%. If the issue's flotation costs are expected to equal 5% of the funds raised, the flotation-cost-adjusted cost of the firm's new common stock is ________.
3. Fuzzy ButtonAc€?cs addition to earnings for this year is expected to be $857,000. Its target capital structure consists of 50% debt, 5% preferred stock, and 45% common stock. Fuzzy Button Clothing CompanyAc€?cs retained earnings breakpoint is _____.
4.A firm will never have to take flotation costs into account when calculating the cost of raising capital from:
a) New Common Stock
b) Retained Earnings
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