CompTIA
Checkpoint
ISC
HP
Dell
EC-Council
EXIN
Fortinet
ITIL®
Juniper
PMI
Microsoft
VMware
Avaya
Google
Salesforce
Amazon
Palo Alto Networks
Certiport
ISC2
All Vendors
  2. Home
  3. Exams
  4. Financial
  5. CMA

Free CMA Exam Braindumps (page: 183)

Page 182 of 336
PDF with 1336 Questions
View Related Case Study

Maylar Corporation has sold $50 million of $1 .000 par value, 12% coupon bonds The bonds were sold at a discount and the corporation received $985 per bond. If the corporate tax rate is 40%. the after-tax cost of these bonds for the first year (rounded to the nearest hundredth percent) is

  1. 7.31%.
  2. 4.87%.
  3. 12.00%.
  4. 7.09%.

Answer(s): A

Explanation:

Interest is 12%, and the annual interest payment on one bond is $120.Thus the effective rate is 12.18% ($120 $985).Reducing this rate by the 40% tax savings lowers the cost to 7.31%.



View Related Case Study

Acme Corporation is selling $25 million of cumulative, non-participating preferred stock. The issue will have a par value of $65 per share with a dividend rate of 6%.The issue will be sold to investors for $68 per share, and issuance costs will be $4 per share The cost of preferred stock to Acme is

  1. 5.42%.
  2. 5.74%.
  3. 6.00%.
  4. 6.09%.

Answer(s): D

Explanation:

The company will receive the use of on $64 per share. The annual dividend requirement is 6% of $65, or $390 per share. Dividing the $3.90 by the $64 received results in a financing cost of 6.09%.



View Related Case Study

By using the dividend growth model, estimate the cost of equity capital for a firm with a stock price of $30 00, an estimated dividend at the end of the first year of $300 per share, and an expected growth rate of 10%.

  1. 21.1%
  2. 122%
  3. 110%
  4. 200%

Answer(s): D

Explanation:

Under the dividend growth model, the cost of equity equals the expected growth rate plus the quotient of the next dividend and the current market price. Thus the cost of equity capital is 20% [10% + ($3 + 11$30)].This model assumes that the payout ratio, retention rate, and the earnings per share growth rate are all constant.



View Related Case Study

A firm's target or optimal capital structure is consistent with which one of the following?

  1. Maximum earnings per share,
  2. Minimum cost of debt.
  3. Minimum risk.
  4. Minimum weighted-average cost of capital

Answer(s): D

Explanation:

Ideally a firm will have a capital structure that minimizes its weighted-average cost of capital This requires a balancing of both debt and equity capital and their associated risk levels.






Post your Comments and Discuss Financial CMA exam with other Community members:

CMA Exam Discussions & Posts