It is authorized to issue 10,710 shares of 8%, $70 par value preferred stock, and 502,000 shares of no-par common stock with a stated value of $2 per share. The following stock transactions were completed during the first year. Jan. 10 | | Issued 80,930 shares of common stock for cash at $6 per share. | Mar. 1 | | Issued 5,770 shares of preferred stock for cash at $112 per share. | Apr. 1 | | Issued 24,940 shares of common stock for land. The asking price of the land was $91,270; the fair
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The Cost of Capital 11-1 a. The weighted average cost of capital, WACC, is the weighted average of the after-tax component costs of capital—-debt, preferred stock, and common equity. Each weighting factor is the proportion of that type of capital in the optimal, or target, capital structure. b. The after-tax cost of debt, kd(1 - T), is the relevant cost to the firm of new debt financing. Since interest is deductible from taxable income, the after-tax cost of debt to the firm is less
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------------------------------------------------- STOCK HOLDER EQUITY Submitted to: Madam Hina Samdani DATE: 04-01-2011 BBA-II (D) Reference: mainly taken from your lectures and some data from company’s official website FINANCIAL ACCOUNTING Submitted by: Shafqat Ali Faizan Ali Adeel Murtaza DanialQureshi Imran Zahoor SabtainZubair INTRODUCTION TOTAL STOCK HOLDER EQUITY: This is a portion of the balance sheet that represents the capital received from investors in exchange for stock (paid-in capital)
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in MM) Short term Borrowings Revolver Bonds Of which Convertible Bonds Convertible Preferred Stock Due Date 15-Aug-09 31-May-10 31-Dec-12 31-May-10 1-Aug-12 31-Mar-14 31-Dec-10 5.2 14.2 80.0 12.0 7.0 Notes 3.2% coupon Due 5/31/2010 7.5% coupon, amortizing Bond Amortizing portion 4.5% coupon, conversion price $25, 1 bond of Fair value $100 converts into 4 shares 9.0 3% coupon, conversion price $20, 1 preferred stock of Fair value $18 converts into 1 share UNDERSTANDING THE CAPITAL STRUCTURE OF THE
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According to investopedia security is “a financial instrument that represents: an ownership position in a publicly-traded corporation (stock), a creditor relationship with governmental body or a corporation (bond), or rights to ownership as represented by an option. A security is a fungible, negotiable financial instrument that represents some type of financial value. The company or entity that issues the security is known as the issuer” (Definition of ‘Security’). Typically securities are divided
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Structure Date: I. Cost of Common Stock The cost of common stock estimated varied widely between the three methods used. Under the CAPM approach, UPS had the lowest cost because it has the lowest beta coefficient, according to Value Line. Conversely, AAWW had the highest cost of common stock because its beta coefficient is almost twice that of UPS. Under the DCF approach, UPS and AAWW were swapped with regard to having a higher cost of common stock. The factor that was primarily responsible
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Equity Markets Common Stock: Represents ownership in a corporation. When firm goes bankrupt, common stock would be paid less with the leftover assets (riskier than debt or preferred shares). Legally, shareholders’ liability for the debts of the firm is limited to their investment (max is 100%) Common stock shareholders may vote with their shares to elect the members of the board of directors. Dividends: Interest payments to shareholders. Dividend Imputation: introduce by Nz&Aus
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Stock Valuation Colin Branch, Ruth Whitehead, Jahna Woodbury, Cynthia Sanshez, and Kathryn Woods FIN/571 March 16, 2015 Oscar Lewis Stock Valuation To understand how investors and markets value stocks it is important to understand what stocks are and how they differ from bonds, the primary evaluation tool used to value stocks, and the consumer tools that are at our disposal to give us data about the value to stock. Stock Ownership is owning capital lifted by a company through issue and subscription
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All companies must make decisions about how they will finance their current and future operations. Firms can elect to borrow funds or they can sell stakes in the company to shareholders. For companies to make these decisions, they need to consider the capital structure, or mix of debt and equity, of the firm. They must also determine the cost of their debt, the cost of their equity, and the cost to acquire new capital. Generally, a firm’s cost of capital is what it costs the firm to acquire money
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financial risk of the firm. D) the risk-free rate of each type of capital plus the business risk and the financial risk of the firm. Answer: D 3) A tax adjustment must be made in determining the cost of A) long-term debt. B) common stock. C) preferred stock. D) retained earnings. Answer: A 4) The approximate before-tax cost of debt for a 15-year, 10 percent, $1,000 par value bond selling at $950 is A) 10 percent. B) 10.6 percent. C) 12 percent. D) 15.4 percent. Answer: B 5) If
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