Since Part of Preference Dividends Received by a Corporation Is

question 2

True/False

Since part of preference dividends received by a corporation is excluded from taxable income, the component cost of equity for a company which pays half of its earnings out as ordinary dividends and half as preference dividends should, theoretically, be
Cost of equity = rs(0.30)(0.50) + rs(1 - T)(0.70)(0.50).

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Definitions:

Operating Expenses

Costs associated with the day-to-day functions of a business like rent, utilities, and salaries, excluding the cost of goods sold.

Depreciation Expense

The portion of an asset's cost allocated across its useful life, representing wear and tear, decay, or obsolescence.

Cash Payments

Transactions involving the transfer of cash from one party to another, often for the purpose of settling debts or purchasing goods and services.

Salaries Expense

The total amount paid to employees for work performed during a specific period, reflected as an expense on the income statement.