The Winner of a Contest, You Are Now CFO for the Day

question 2

Multiple Choice

the winner of a contest, you are now CFO for the day for Maguire Incand your day's job involves raising capital for expansionMaguire's common stock currently sells for $45.00 per share, the company expects to earn $2.75 per share during the current year, its expected payout ratio is 70%, and its expected constant growth rate is 6.00% New stock can be sold to the public at the current price, but a flotation cost of 8% would be incurred By how much would the cost of new stock exceed the cost of common from retained earnings?

• A) 0.09%
• B) 0.19%
• C) 0.37%
• D) 0.56%
• E) 0.84%

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Definitions:

Rhizopus

A genus of fungi, known for causing rot in fruits and vegetables and sometimes opportunistic infections in humans.

Zygospore

A sexual spore produced by a zygomycete.

Haploid

A cell or organism that contains a single set of chromosomes, typically representative of gametes in sexually reproducing organisms.

Black Stem Rust

A fungal disease caused by Puccinia graminis that affects cereals and grasses, characterized by dark rust pustules on stems and leaves.