S&W Has 21,000 Shares of Common Stock Outstanding at a Price

question 8

Multiple Choice

S&W has 21,000 shares of common stock outstanding at a price of $29 a share.It also has 2,000 shares of preferred stock outstanding at a price of $71 a share.The firm has 7 percent, 12-year bonds outstanding with a total market value of $386,000.The bonds are currently quoted at 100.6 percent of face and pay interest semiannually.What is the capital structure weight of the firm's preferred stock if the tax rate is 34 percent?

• A)12.49 percent
• B)9.00 percent
• C)8.24 percent
• D)11.84 percent
• E)13.63 percent

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Definitions:

Foot-In-The-Door Phenomenon

The tendency for people who have first agreed to a small request to comply later with a larger request.

Cognitive Dissonance

A psychological phenomenon where an individual experiences discomfort or mental conflict due to holding contradictory beliefs, values, or attitudes, especially when prompted to act against one of those beliefs.

Situational Attribution

The process of attributing an individual's behavior to external factors in the environment rather than to internal personality traits.

Attitude

An acquired inclination to assess various entities, including people, topics, objects, or occurrences, in a specific manner.