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NEW QUESTION: 1
Bouchard Company's stock sells for $20 per share, its last dividend was $1.00. Its growth rate is a constant 6 percent, and the company would incur a flotation cost of 20 percent if it sold new common stock. Retained earnings for the coming year are expected to be $1,000,000, and the amount of common equity in the capital structure is 60 percent. If Bouchard has a capital budget of $2,000,000, what component cost of common equity will be built into the WACC for the last dollar of capital the company raises?
A. 12.15%
B. 12.63%
C. 11.30%
D. 11.80%
E. 11.45%
Answer: B
Explanation:
Explanation/Reference:
Explanation:
BP(RE) = RE/Equity fraction = $1,000,000/0.6 = $1,666,667.
Since the capital budget will be $2 million, and since all equity in the WACC (Weighted Average Cost of Capital) beyond $1,666,667 will be external equity, the WACC of the last dollar raised will include equity at a cost of k(e) (component cost of external equity obtained by issuing new common stock as opposed to retaining earnings):
k(e) = $1(1.06)/$20(1 - 0.2) + 0.06 = 0.0663 + 0.06 = 0.1263 = 12.63%.

NEW QUESTION: 2
Which of the following is a product-oriented definition of a business rather than a market-oriented definition of a business?
A. We make movies.
B. We supply energy.
C. We are a people-and-goods mover.
D. We provide climate control in the home.
Answer: A

NEW QUESTION: 3
Why would the Load Impact service in IBM Bluemix PaaS be used?
A. For its ability to replicate instances across IBM Bluemix PaaS regions.
B. For its ability to simulate user loads on IBM Bluemix PaaS applications.
C. For its ability to increase application availability by increasing application instances.
D. For its ability to manage a sudden load increase in an application.
Answer: B

NEW QUESTION: 4
外部ゾーンのデフォルトのIP範囲は何ですか？
A. 0.0.0.0/8
B. 0.0.0.0 - 255.255.255.255
C. 管理インターフェースのネットワーク
D. 0.0.0.0 0.0.0.0
Answer: B