A Firm Has $2 Million Market Value and It Sells

question 15

Multiple Choice

A firm has $2 million market value and it sells preferred stock with a par value of $100.If the coupon rate on the preferred stock is 8% and the preferred stock trades at $90,what is the cost of preferred stock financing?

• A)8.75%
• B)8.89%
• C)9.21%
• D)9.35%

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Definitions:

Budgeting

The process of creating a plan to spend your money, allowing for the allocation of funds to various areas.

Actual Results

The real financial outcomes achieved by a business over a period, which can be compared against budgeted or forecasted figures for analysis.

Personnel Expenses

Personnel expenses are costs associated with employing staff, including wages, benefits, and taxes.

Client-visits

Client-visits refer to the number of times clients visit a business or service provider, often used to measure customer engagement or service utilization.