Corporation X Needs $1,000,000 and Can Raise This Through Debt

question 48

Multiple Choice

Corporation X needs $1,000,000 and can raise this through debt at an annual rate of 6 percent,or preferred stock at an annual cost of 8 percent.If the corporation has a 21 percent tax rate,the after-tax cost of each is ________.

• A)debt: $60,000; preferred stock: $80,000
• B)debt: $47,400; preferred stock: $63,200
• C)debt: $47,400; preferred stock: $80,000
• D)debt: $60,000; preferred stock: $63,200

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Definitions:

Sensual Feelings

Experiences or perceptions related to physical sensations of pleasure.

Status

Refers to the standing or condition of something or someone at a specific time, often used in social, professional, or legal contexts.

Sales Message

Communication aimed at persuading potential customers to purchase a product or service.

Perceptive Consumer

A consumer skilled at noticing and understanding things that are not obvious to others, particularly in relation to products and services.