As the Winner of a Contest, You Are Now CFO

question 81

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:

Leadership Literature

Publications and scholarly works that explore theories, practices, and studies related to leadership and its effects in various contexts.

Concern For Task

The emphasis on accomplishing objectives and achieving goals within an organization or project.

Relationship Orientation

A focus on the development and maintenance of interpersonal relationships within a group or organization.

Behavioural Approach

A perspective in psychology and management focusing on observable behaviors, analyzing how they're learned and influenced by the environment, rather than internal thoughts or feelings.