i am losing it

CFA Level I
#1

NI of a company = 70 Pretax Income = 100 the issue price of the last time company issued preferred stock (20 yrs ago) was 100 and dividend was 5%. Company is in need of cash today, and has decided to issue another preferred stock worth 100 at 6.5%. The company’s Cost of preferred stock,NI is closest to a) 5%, 70 b) 6.5%, 70 c) 5%, 65 d) 6.5%, 65

#2

B or D

#3

B?

#4

D. dividend paid should decrease net income. Not sure.

#5

NI is 70? that is what it says in the question?

#6

hopetobeat Wrote: ------------------------------------------------------- > D. dividend paid should decrease net income. > > Not sure. no, dividend is not an expense.

#7

B

#8

hopetobeat Wrote: ------------------------------------------------------- > D. dividend paid should decrease net income. > > Not sure. Dividend are paid out of retained earning…I think

#9

B, Dividends from RE, doesnt affect NI…or so I think but my FSA is FSAwful

#10

daj224 Wrote: ------------------------------------------------------- > hopetobeat Wrote: > -------------------------------------------------- > ----- > > D. dividend paid should decrease net income. > > > > Not sure. > > > no, dividend is not an expense. Just because dividend paid is not expense, it should influence net income, otherwise it is already included in net income.

#11

B

#12

Net income should not change… dividend is deducted from the net income and the rest goes as retained earnings… B