As the Winner of a Contest, You Are Now CFO

question 77

Multiple Choice

As the winner of a contest, you are now CFO for the day for Maguire Inc.and your day's job involves raising capital for expansion.Maguire'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 reinvested earnings?

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

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Definitions:

Transplant

The act of transferring cells, tissues, or organs from one site to another in the same body or from one individual to another to replace or repair damaged or diseased body parts.

Glial Cells

Non-neuronal cells in the central and peripheral nervous system that provide support and protection for neurons, playing crucial roles in maintaining homeostasis, forming myelin, and participating in signal transmission.

Primary Functions

The fundamental or core roles that an organism, system, or component is naturally designed to perform.

Schwann Cells

Glial cells in the peripheral nervous system that wrap around axons, providing insulation (myelin) and support for nerve conduction.