Author Question: Although a company is financed only through debt, it should use its WACC to evaluate this years ... (Read 65 times)

Sadjam2 · **on:** Aug 7, 2023

Question 1

Your employer pays a $2.60 dividend on its preferred shares. If the price of its preferred shares is $41 and flotation costs would be 2% per share, what is the required rate of return on the firm’s preferred shares?

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5.08%

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5.46%

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6.05%

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6.47%

Question 2

Although a company is financed only through debt, it should use its WACC to evaluate this year’s projects. It is because all investors (new debtholders, old debtholders, and equity holders) have claims on all future cash flows.

◦ true
◦ false

ad2018 · **Reply #1 on:** Aug 7, 2023

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