If the Beta company issues $100 million worth of preferred stock, what will happen to its net worth if book value of common equity is $500 million?
A)it will increase by $400 million.
B)it will decrease by $100 million.
C)it will increase to $600 million.
D)it will decrease to $400 million.

Question

Quizplus · Accepted Answer

Issuing $100 million worth of preferred stock increases the company's equity by $100 million, raising the total equity from $500 million to $600 million.

If the Beta Company Issues $100 Million Worth of Preferred