[Biff-1955-Tannen]

NINJA Question –

Can somebody that has BEC MCQ look at question 393 and question 400 please.

I don’t understand why in question 393, the underpricing and floatation cost is used in calculating the cost of issuing the common stock, and in question 400 these are not used…

AUD 93 Jan 16
BEC 83 Feb 16
FAR 83 Apr 16
REG 84 May 16

99% Ninja MCQ only

[monikernc]

Biff – i looked at these. 393 asks specifically about cost of common stock and therefore uses flotation costs in denominator. 400 is calculating the cost of equity based on exclusive use of retained earnings for which no flotation costs are required.
For 400 i couldn't figure out where the 200,000 came from that resulted in the use of the 100,000 already available from retained earnings. Did you figure that out?

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AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
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[Biff-1955-Tannen]

Hey thanks for the reply, I appreciate you looking at that for me. I didn't realize before that they were just using R/E and not issuing new stock on 400. I have no clue where the $200,000 came from either, that came out of nowhere.

AUD 93 Jan 16
BEC 83 Feb 16
FAR 83 Apr 16
REG 84 May 16

99% Ninja MCQ only

[Author]

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