Calculate the after-tax cost of this preferred stock

Reference no: EM13298443

St. Joe Trucking has sold an issue of $6 cumulative preferred stock to the common public at a price of $60 per share. After issuance costs, St. Joe netted $57 per share. The company has a marginal tax rate of 40 percent.

a. Calculate the after-tax cost of this preferred stock offering assuming that this stock is a perpetuity.

b. If the stock is callable in five years at $66 per share and investors expect it to be called at the time, what is the after-tax cost of this preferred stock offering? (Compute to the nearest whole percent.)

Reference no: EM13298443

Questions Cloud

Define density and specific heat capacity of the solution : Calculate H of this reaction per mole of H2SO4 and KOH reacted. (Assume that the total volume is the sum of the individual volumes and that the density and specific heat capacity of the solution are the same as for pure water

Find the normal force at the bottom of the wheels trajectory : A Ferris wheel with radius 38m is driven by a motor that exerts a force on the wheel 1m from the center. find the normal force at the bottom of the wheel's trajectory

An operational system : An operational system is which of the following?

Should aerotron electronics buy the water filtration system : a. What is this investment's external rate of return b. What is the decision rule for judging the attractiveness of investments based on external rate of return c. Should Aerotron Electronics buy the water filtration system

Calculate the after-tax cost of this preferred stock : If the stock is callable in five years at $66 per share and investors expect it to be called at the time, what is the after-tax cost of this preferred stock offering? (Compute to the nearest whole percent.)

Explain computation of h of this reaction per mole of h2so4 : When 26.0 mL of 0.565 M H2SO4 is added to 26.0 mL of 1.13 M KOH in a coffee-cup calorimeter at 23.50°C, the temperature rises to 30.17°C. Calculate H of this reaction per mole of H2SO4 and KOH reacted.

What is each projects internal rate of return : What is each project's payback period - what is each projects net present value and what is each project's internal rate of return?

What is the formula for calculating residual income : What is the formula for calculating residual income? I have sales #'s, invested capital #'s, net operating profit after taxes #'s and minimun required return percentage.

Mass of a moving object is doubled with no change in speed : When the mass of a moving object is doubled with no change in speed, by what factor is its momenteum changed? its kinetic energy? At what point in its motion is the KE of a pendulum bob a maximum? when its KE is half its maximum value, how much PE do..

User Account

All Pages