New common stock is more expensive than ke

A to compensate for risk b to compensate for more dividends c to compensate for expansionary problems d to cover distribution costs. Explore answers and all related questions.

Regardless of the particular source of funds utilized for a project the required rate of return or discount rate will be the weighted average cost of capital.

New common stock is more expensive than ke. Question 1 New common stock is more expensive than Ke. To compensate for risk. To compensate for more dividends.

To compensate for expansionary problems. To cover distribution costs. Question 2 In computing the cost of common equity if D1 goes downward and Po goes up Ke will.

Question 3 In determining the cost of. Question 1 New common stock is more expensive than Ke. To compensate for ris.

March 4th 2019 admin. Question 1 New common stock is more expensive than Ke. To compensate for risk.

To compensate for more dividends. New common stock is more expensive than K e A. To compensate for risk.

To compensate for more dividends. To compensate for expansionary problems. To cover distribution costs.

In computing the cost of common equity if D 1 goes downward and P o goes up K e will A. New common stock is more expensive than k e Multiple Choice a-to compensate for more dividends. B-to compensate for risk.

C-to cover distribution costs. D-to compensate for expansionary problems. Comments 0 Answered by Expert Tutors Solution.

New common stock is more expensive than ke. The correct option is. C-to cover distribution costs.

Jump to Expert Tutor Answer. A common stock is issued to raise money from the public. The common shareholders are the real owners of the company and have voting rights.

In order to cover the distribution costs the price of new common shares is increased. Therefore it is more expensive than the Ke. New common stock is more expensive than required rate of return Ke because new common stock has to A.

Compensate for more dividends. Compensate for expansionary problems. New common stock is more expensive than Ke A.

To compensate for risk. To compensate for more dividends. To compensate for expansionary problems.

To cover distribution costs. Flotation costs for new issuances of preferred stock are 5 of the stock value. What is the after-tax cost of preferred stock if the firms tax rate is 30.

Question 13 New common stock is more expensive than Ke to. Compensate for more dividends. Compensate for expansionary problems.

Using the constant dividend growth model for common stock if Pogoes up A. The assumed cost goes up. The assumed cost goes down.

The assumed cost remains unchanged. New common stock is more expensive than ke A. To compensate for risk.

To compensate for more dividends. To compensate for expansionary problems. New common stock is more expensive than K e A to compensate for risk B to.

New common stock is more expensive than k e a to. School New Jersey City University. Course Title ECON 607.

Pages 60 Ratings 93 67 62 out of 67 people found this document helpful. This preview shows page 13 - 16 out of 60 pages. The cost of equity capital in the form of new common stock will be higher than the cost of retained earnings because of.

The existence of flotation costs. The after tax cost of debt will usually be below. New common stock is more expensive than required rate of return KS1U1B1eS1U1B0 because new common stock has to A compensate for risk.

B compensate for more dividends. C compensate for expansionary problems. D cover distribution costs.

The only difference in the cost of retained earnings Ke and the cost of new common stock Kn is the flotation cost on new common stock. Regardless of the particular source of funds utilized for a project the required rate of return or discount rate will be the weighted average cost of capital. The lower the cost of capital used the less demand there is on the target rate of return that an investment must achieve.

Cost of capital is directly linked to the risk characteristics of the capital used. In general common stock is considered more expensive than preferred stock because common stock assumes more risk than preferred stock. The cost of capital to companies is also the rate of return for.

New common stock is more expensive than K e A to compensate for risk. B to compensate for more dividends. C to compensate for expansionary problems.

D to cover distribution costs. Explore answers and all related questions. In computing the cost of common equity if D 1 goes downward and P o goes up K e.

It is often more expensive because the available real estate on a waterfront is very limited. It is not common and so the price is more expensive than a typical real estate. Preferred stocks are often issued as a last resort.

Companies use it after theyve gotten all they can from issuing common stocks and bonds. Preferred stocks are more expensive than bonds. The dividends paid by preferred stocks come from the companys after-tax profits.

These expenses are not deductible. The interest paid on bonds is tax-deductible. It runs cheaper for the company.

Question New common stock is more expensive than existing common stock. A to compensate for risk b to compensate for more dividends c to compensate for expansionary problems d to cover distribution costs.