Calculate cost of preference shares

1. On 10 june, 2017, Hood Ltd had an issue of preference shares that traded at $75 a share If the face value of the shares was $100 per share and the dividend is$600

REQUIRED:

i) Calculate Hood Ltd’s cost of preference shares

ii) If the cost of debt is the same as in i) above, would you recommend that the company use debt or preference shares to raise additional capital Give reasons

LMN, a manufacturing company, plans to sell 400,000 units of finished product in July and anticipates a growth rate in sales of 4 percent per month The desired monthly ending inventory in units of finished product is 80 percent of the next month’s estimated sales There are 320,000 finished units in inventory on June 30

 

Required:Compute the company’s totalrequired production in units of finished product for the-month ending July 31

Solution: