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the current capital to be reported on a balance sheet is calculated as: the capital account balance plus net income equals current capital
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- J. Ross and Sons Inc. has a target capital structure that calls for 40 percent debt, 10 percent preferred stock, and 50 percent common equity. Ross' common stock currently sells for $40 per share. The firm recently paid a dividend of $2 per share on its common stock, and investors expect the dividend to grow indefinitely at a constant rate of 10 percent per year. Which of the following is the firm's cost of retained earnings? (Round off the answer to two decimal places.)
- Which of the following statements is CORRECT?a. The WACC as used in capital budgeting will be the after-tax cost of debt if the firm plans to use only debt to finance its capital budget during the coming year.b. The percentage flotation costs associated with issuing new common equity are typically smaller than the flotation costs for new debt.c. The WACC as used in capital budgeting is an estimate of a company's before-tax cost of capital.d. The WACC as used in capital budgeting is an estimate of the cost of all the capital a company has raised to acquire its assets.e. There is an "opportunity cost" associated with using retained earnings-they are not "free."
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