According to the bond-yield-plus-risk-premium approach, a firm's cost of retained earnings, rs, can be estimated by adding a risk premium of 3 to 5 percentage points to:
A. its cost of preferred stock, rps.
B. the risk free rate of return.
C. its before-tax interest cost of debt, rs.
D. its return on equity (ROE).
E. its after-tax interest cost of debt, rsT.
Answer: C
You might also like to view...
When Nick is figuring the current assets for his nail salon, he should be certain to include ________ in his calculations.
A. accrued liabilities B. retained earnings C. fixed assets D. notes receivable E. the cash in the drawer
The production schedule is
a. the expected demand for the firm's finished goods for a given year b. the formal plan and authority to begin production c. a description of the type and quantity of raw materials and subassemblies used to produce a single unit of finished product d. the sequence of operations during manufacturing
Skeeter Company produces 100,00 . insect repellent devices each day, and the average number of units in work in process is 150,000 . with an average value of $300,000 . The average annual carrying cost percentage is 30%
a. Determine the throughput time. b. Compute the annual carrying cost. c. If the same daily output can be achieved while reducing the work in process by 40%, determine the new throughput time. d. Compute the annual carrying cost given the information in requirement c.
It is considered unethical to use the estimate for bad debts to purposely manipulate the amount of net income
Indicate whether the statement is true or false