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Firm X Has a Tax Rate of 30

Question 28
Multiple Choice

Firm X has a tax rate of 30%. The price of its new preferred stock is $63 and its flotation cost is $3.15. The cost of new preferred stock is 12%. What is the firm's dividend? A) $7.18 B) $5.03 C) $7.56 D) $6.30

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Q 29
A firm's cost of financing, in an overall sense, is equal to its: A) weighted average cost of capital. B) yield from various kinds of marketable securities. C) rate of return from various kinds of marketable securities. D) rate of return of debt required by its investors.
Q 30
The cost of equity capital in the form of new common stock will be higher than the cost of retained earnings because of: A) the existence of taxes. B) the existence of flotation costs. C) investors' unwillingness to purchase additional shares of common stock. D) the existence of financial leverage.
Q 31
The after tax cost of debt will usually be below: A) the cost of dividends. B) the weighted average cost of capital less the cost of equity. C) the cost of equity. D) the floatation cost.
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