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The management of a conservative firm has adopted a policy of never letting debt exceed 30 percent of total financing. The firm will earn $10,000,000 but distributed 40 percent in dividends, so the firm will have $6,000,000 to add to retained earnings. Currently the price of the stock is $50; the company pays a $2 per share dividend, which is expected to grow annually at 10 percent. If the company sells new shares, the net to the company will be $48. Given this information, what is thea. cost of retained earningsb. cost of new common stock?The rate of interest on the firm's long-term debt is 10 percent and the firm is in the 32 percent income tax bracket. If the firm issues more than $2,400,000, the interest rate will rise to 11 percent. Given this information, what is thec. cost of debtd. cost of debt in excess of $2,400,000?The firm raises funds in increments of $3,000,000 consisting of $900,000 in debt and $2,100,000 in equity. This strategy maintains the capital structure through $12,000,000. What impact would each of the following have on the marginal cost of capital schedule?e. the firm's income tax rate increasesf. the firm retains all of its earnings and the price of the stock is unaffectedg. $12,000,000 is insufficient to meet attractive investment opportunities
Research at least one (2) firm who have been paying dividends. This information can be found on any reputable financial website.
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The ratio analysis indicates that ACME has increased their profits and decreased their liabilities from 2003 to 2004. ACME has also increased their ability to cover interest payments and increased their return on assets.
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Examine the role that regulation changes actually played in the unraveling of our finical system. Write an essay on the effect of regulation/deregulation in the recent finical crisis.
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