Since 70% of the Preferred Dividends Received by a Corporation

question 22

True/False

Since 70% of the preferred dividends received by a corporation are excluded from taxable income,the component cost of equity for a company that pays half of its earnings out as common dividends and half as preferred dividends should,theoretically,be
Cost of equity = r_s(0.30)(0.50)+ r_ps(1 − T)(0.70)(0.50).

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Definitions:

Action Specific Energy

A concept in ethology suggesting that certain behaviors build up energy within an organism, which then seeks release through specific actions.

Instinctive Behaviors

Innate, fixed patterns of response to stimuli that are not learned and are common to all members of a species.

Conditioning Experience

The process through which an association between two stimuli or a behavior and a stimulus is learned.

A State

In psychology, a temporary emotional or mental condition in contrast to more stable traits.