Part A:
Price of Preferred Stock = Preference Div / Required Ret
= [ Par Value * Div Rate ] / Reuired Ret
= [ $ 800 * 9% ] / 11%
= $ 72 / 11%
= 654.55
Part B:
Price of Stock = D0(1+g) / [ Ke - g ]
= $ 3.8(1+0.10) / [ 16% - 105 ]
= $ 3.8(1.1) / 6%
= 4.18 / 6%
= 69.67
need help with question 3 and 4 please Question 3 (1 point) Timeless Corporation issued preferred stock with a par v...
Question 21 (3.5 points) Timeless Corporation issued preferred stock with a par value of $800. The stock promised to pay an annual dividend equal to 12.0% of the par value. If the appropriate discount rate for this stock is 13.0%, what is the value of the stock? $866.67 $738.46 O $812.82 O $606.28 O $623.26
need help with questions 7 and 8 please Question 7 (1 point) Growing, Inc. is a firm that is experiencing rapid growth. The firm yesterday paid a dividend of $3.70. You believe that dividends will grow at a rate of 20.0% per year for years one and two, 11.0% per year for years three and four, and then at a rate of 10.0% per year thereafter. If you expect an annual rate of return of 22.0% on this investment, what...
need help with questions 5 and 6 please Question 5 (1 point) You are considering buying common stock in Grow On, Inc. You have projected that the next dividend the company will pay will equal $3.90 and that dividends will grow at a rate of 6.0% per year thereafter. If you would want an annual return of 25.0% to invest in this stock, what is the most you should pay for the stock now? $21.76 $20.53 $15.60 $16.54 $22.43 Question...
39 You are considering buying common stock in Grow On, Inc. The firm yesterday paid a dividend of $8.20. You have projected that dividends will grow at a rate of 7.0% per year indefinitely. If you want an annual return of 13.0%, what is the most you should pay for the stock now? $63.08 $136.67 $146.23 $67.49 $159.77
1) You are evaluating a potential investment in equipment. The equipment's basic price is $187,000, and shipping costs will be $3,700. It will cost another $22,400 to modify it for special use by your firm, and an additional $9,400 to install it. The equipment falls in the MACRS 3-year class that allows depreciation of 33% the first year, 45% the second year, 15% the third year, and 7% the fourth year. You expect to sell the equipment for 24,500 at...
You are considering buying common stock in Grow On, Inc. The firm yesterday paid a dividend of $5.20. You have projected that dividends will grow at a rate of 10.0% per year indefinitely. The firm's beta is 2.30, the risk-free rate is 7.7%, and the market return is 10.4%. What is the most you should pay for the stock now? $146.29 $132.99 $37.38 $41.12 $159.83
need help with question 6 Question 6 (1 point) ✓ Saved You are considering buying common stock in Grow On, Inc. You have projected that the next dividend the company will pay will equal $5.60 and that dividends will grow at a rate of 7.0% per year thereafter. The firm's beta is 2.28, the risk-free rate is 6.7%, and the market return is 15.8%. What is the most you should pay for the stock now? $29.30 $27.38 $20.40 O $21.83...
Question 19 (4 points) Grow On, Inc. is a firm that is experiencing rapid growth. The firm yesterday paid a dividend of $3.20. You believe that dividends will grow at a rate of 19% per year for two years, and then at a rate of 5% per year thereafter. You expect the stock will sell for $14.87 in two years. You expect an annual rate of return of 21% on this investment. If you plan to hold the stock indefinitely,...
Problem 8-1(Preferred stock valuation) What is the value of a preferred stock when the dividend rate is 16 percent on a $75 par value? The appropriate discount rate for a stock of this risk level is 14 percent. The value of the preferred stock is _______ . (Round to the nearest cent.)(Preferred stock valuation) The preferred stock of Gandt Corporation pays a $0.50 dividend. What is the value of the stock if your required return is 11 percent? The value of the...
Question 23 (3.5 points) Growing, Inc. is a firm that is experiencing rapid growth. The firm yesterday paid a dividend of $5.90. You believe that dividends will grow at a rate of 19.0% per year for three years, and then at a rate of 7.0% per year thereafter. You expect that the stock will sell for $268.20 in three years. You expect an annual rate of return of 12.0% on this investment. If you plan to hold the stock indefinitely,...