A corporation recently purchased some preferred stock that has a
before-tax yield of 8.5%. The company...
A corporation recently purchased some preferred stock that has a
before-tax yield of 8.5%. The company has a tax rate of 40%. What
is the after-tax return on the preferred stock? A. 7.48% B. 6.65%
C. 7.04% D. 7.74% E. 7.28%
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Carmen Company is a corporation that has issued both preferred
and common stock. As of January 1, it had 50,000 shares of 2.75%,
$100 par, preferred stock outstanding and 250,000 shares of $10 par
common stock outstanding.
a. On January 31, the board of directors issues
a requirement to purchase 5,000 shares of its common stock at
market price. The shares are purchased at a market price of $22 per
share.
Journalize the purchase utilizing the cost concept.
Jan. 31...
Find the after-tax return to a corporation that buys a share of
preferred stock at $52, sells it at year-end at $52, and receives a
$7 year-end dividend. The firm is in the 30% tax bracket.
(Do not round intermediate calculations. Round your answer
to 2 decimal places.)
The treasurer of Kelly Bottling Company (a corporation)
currently has $350,000 invested in preferred stock yielding 8
percent. He appreciates the tax advantages of preferred stock and
is considering buying $350,000 more with borrowed funds. The cost
of the borrowed funds is 9 percent. He suggests this proposal to
his board of directors. They are somewhat concerned by the fact
that the treasurer will be paying 1 percent more for funds than the
company will be earning on the investment....
MJI Corporation bonds mature in 6 years and have a yield to
maturity of 8.5 percent. The par value of the bonds is $1,000. The
bonds have a 10 percent coupon rate and pay interest on a
semi-annual basis. Assuming there are no changes to interest rates
during the course of the year, what are the current yield and
capital gains on the bonds for this year?
MJI Corporation bonds mature in 6 years and have a yield to
maturity of 8.5 percent. The par value of the bonds is $1,000. The
bonds have a 10 percent coupon rate and pay interest on a
semi-annual basis. Assuming there are no changes to interest rates
during the course of the year, what are the current yield and
capital gains yield on the bonds for this year?
12. MJI Corporation bonds mature in 6 years and have a yield to
maturity of 8.5 percent. The par value of the bonds is $1,000. The
bonds have a 10 percent coupon rate and pay interest on a
semi-annual basis. Assuming there are no changes to interest rates
during the course of the year, what are the current yield and
capital gains yield on the bonds for this year?
13. Bond Relationships. Select one or more of the following
phrases...
Vigor Corporation reports a net income before tax for 2020 of
$512,800, has a tax rate of 21% and provides the following selected
information (covers the three tax difference
items) from its ledger as at December 31, 2019 and 2020:
2019
2020
Equipment, at
cost
900,000 DR 900,000 DR
Accumulated depreciation, equipment 450,000 CR
525,000 CR
Deferred Tax
Asset
10,080
DR
?
Warranty
Liability
48,000 CR 56,000 CR
Deferred Tax
Liability
47,250
CR ...
Parker Corporation has issued 1,700 shares of common stock and
340 shares of preferred stock for a lump sum of $62,000 cash.
Give the entry for the issuance assuming the par value of the
common stock was $5 and the fair value $30, and the par value of
the preferred stock was $40 and the fair value $50. (Each valuation
is on a per share basis and there are ready markets for each
stock.) (Credit account titles are automatically
indented...
Bluefield Corporation has 6 million shares of common stock
outstanding, 600,000 shares of preferred stock that pays an annual
dividend of $8, and 200,000 bonds with a 10 percent coupon
(semiannual interest) and 20 years to maturity. At present, the
common stock is selling for $50 per share, the bonds are selling
for $950.62 per $1,000 of face value, and the preferred stock is
selling at $74 per share.
The estimated required rate of return on the market is 13...
Net Present Value Method for a Service Company
Carnival Corporation has recently placed into service some of
the largest cruise ships in the world. One of these ships, the
Carnival Breeze, can hold up to 3,600 passengers, and it can cost
$800 million to build. Assume the following additional
information:
There will be 330 cruise days per year operated at a full
capacity of 3,600 passengers.
The variable expenses per passenger are estimated to be $110 per
cruise day.
The...