65. The preferred stock of Nadine Fashions pays an annual dividend of $7.25 a share and sellsfor $54 a share. The tax rate is 35 percent. What is the firm's cost of preferred stock? a. 8.73 percentb. 9.46 percentc. 12.78 percentD. 13.43 percente. 14.47 percentBLOOMS TAXONOMY QUESTION TYPE: APPLICATION

LEARNING OBJECTIVE NUMBER: 1LEVEL OF DIFFICULTY: BASICSECTION: 12.3TOPIC: COST OF PREFERREDTYPE: PROBLEMS12-30

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Chapter 14 / Exercise 21

**South-Western Federal Taxation 2020: Individual Income Taxes**

Young/Nellen/Hoffman

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Chapter 012 Cost of Capital66. The Burger Stop has 80,000 shares of common stock outstanding at a price of $28 a share.It also has 15,000 shares of preferred stock outstanding at a price of $63 a share. There are five hundred 8.5 percent bonds outstanding that are priced at par. The bonds mature in 14 years, pay interest semiannually, and have a face value of $1,000. What is the capital structureweight of the preferred stock?

LEARNING OBJECTIVE NUMBER: 3LEVEL OF DIFFICULTY: BASICSECTION: 12.4TOPIC: WEIGHT OF PREFERRED STOCKTYPE: PROBLEMS67. J&J Movers has 40,000 shares of common stock outstanding at a price of $34 a share. It also has 4,000 shares of preferred stock outstanding at a price of $58 a share. The firm has 9 percent, 10-year bonds outstanding with a total face value of $500,000. The bonds are currently quoted at 96 and pay interest semiannually. What is the capital structure weight of the firm's debt if the tax rate is 34 percent?

BLOOMS TAXONOMY QUESTION TYPE: APPLICATIONLEARNING OBJECTIVE NUMBER: 3LEVEL OF DIFFICULTY: BASICSECTION: 12.4TOPIC: WEIGHT OF DEBTTYPE: PROBLEMS12-31

Chapter 012 Cost of Capital68. NR Industries has 135,000 shares of common stock outstanding. The stock is currently selling for $57 a share. The firm also has 2 bond issues outstanding. The first bond issue has atotal face value of $300,000, pays 9.5 percent interest annually, and currently sells for 101 percent of face value. The second bond issue consists of 6,000 bonds that are selling for $986 each. These bonds pay 8 percent interest annually and mature in 11 years. The tax rate is 35 percent. What is the capital structure weight of the firm's common stock?

LEARNING OBJECTIVE NUMBER: 3LEVEL OF DIFFICULTY: BASICSECTION: 12.4TOPIC: WEIGHT OF COMMON STOCKTYPE: PROBLEMS