bus_401_week_3__quiz_3

Apr 8th, 2015
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American Public University System
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Hi there.This document contains A+ work for the course BUS 401.I am sure that this work will not disappoint you.This document will give you the correct answers to the respective questions about the particular course.

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Grade Details1.Question :Jiffy Wax Corp. Can sell common stock for $15 per share and its investors require a 14 % return. However, the administrative or flotation costs associated with selling the stock amount to $2.40 per share. What is the cost of capital for Jiffy Wax if the corporation raises money by sellingpreferred stock?Student Answer:30.00%21.50%16.67%14.00%Points Received:1 of 1Comments:2.Question :Kinslow Manufacturing Company paid a dividend yesterday of $2.50 per share. The dividend is expected to grow at a constant rate of 5% per year. The price of Kinslow's common stock today is $25 per share. If Kinslow decides to issue new common stock, flotation costs will equal $2.00 per share. Key's marginal tax rate is 34 %. Based on the above information, the cost of retained earnings is _________Student Answer:16.14%15.50%15.00%10.55 %Points Received:1 of 1Comments:3.Question :Nickel Industries is considering the purchase of a new machine that will cost $178,000, plus an additional $12,000 to ship and install. The new machine will have a 5 year useful life and will be depreciated using the straight line method. The machine is expected to generate new sales of $85,000 per year and is expected to increase operating costs by $ 10,000 annually. Nickel's income tax rate is 40%. What is the projected incremental cash flow of the machine or year 1?Student Answer:$54,800$60,20

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