Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. the cost of equity and the cost of debt. your chie

The cost of equity and the cost of debt. your chief operating officer argues the...

70.2K

Verified Solution

Question

Accounting

The cost of equity and the cost of debt. your chief operating officer argues the following:

a. "our stock price is currently $60, and our dividend per share is $6. It means that it costs us 10 percent to use shareholders' cash ($6 divided by $60)."

b. "From our balance sheet our liabilities are $80 million. From our income state- ment our interest expenses are $5 million. Thus our cost of debt is 6.25 percent ($5 million divided by $80 million)."

Which statement is true or false?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

In a 61.0-g aqueous solution of methanol, CH4O, the mole fraction of methanol is 0.320. What...

Chemistry
Q

Show with detailed solutions and formula derivations if t here is any 15 m 53...

Physics
Q

LOGO Plus What does the question mark refer to Product awareness SLOGAN O Product safety...

Basic Math
Q

A girl flies a kite at a height of 300 ft, and the wind carries...

Basic Math
Q

ises 23 26 determine whether the function is even od x 2 24

Algebra
Q

III vlor On December 31, 2020 Fashion Nugget...

Accounting
Q

The 2024 income statement of Adrian Express...

Accounting
Q

s a new CFO, how will your rank these projects and will you prefer Cloud...

Accounting
Q

Hello, Please I need help your help with Microsoft Access. Thank you ...

Accounting
Q

Delivery Entity (DE) exchanges one delivery truck with a carrying value of $10,000 ($50,000 cost...

Accounting
Q

Do you think the 'guidance' provided by Wall Street (viz. earnings projections, stock price projections...

Accounting
Q

Sebastian received the following in 2021: Cash award for winning an Academic Decathlon...

Accounting