$ 1.48 million
$ 3.74 million
Chelsea Fashions is expected to pay an annual dividend of $ 1.10 a share next year. The market price of the stock is $ 21.80 and the growth rate is 4.5 percent. What is the firm’ s cost of equity?
9.55 percent
10.54 percent
9.24 percent
7.91 percent
9.77 percent
Operating leverage is the degree of dependence a firm places on its:
Depreciation tax shield.
Variable costs.
Fixed costs.
Operating cash flows.
Sales.
Phillips Equipment has 75,000 bonds outstanding that are selling at par. Bonds with similar characteristics are yielding 7.5 percent. The company also has 750,000 shares of 6 percent preferred stock and 2.5 million shares of common stock outstanding. The preferred stock sells for $ 64 a share. The common stock has a beta of 1.21 and sells for $ 44 a share. The