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dmitriy555 [2]
3 years ago
10

LTM, Inc. has an issue of preferred stock whose par value is $1,000. The preferred stock pays a 4.5% dividend. If investors requ

ire a 5.5% rate of return for these shares, what price should the preferred stock sell for?
Business
1 answer:
Elena L [17]3 years ago
7 0

Answer:

Explanation:

return on preferred stock (rp) = Dividend/ Current price

rate of return  = 5.5% or 0.055 as a decimal

Dividend amount = dividend rate * par value ;

Dividend amount = 4.5% * 1000 = $45

Current price = ?

Next, plug the numbers to the formula above to find Price;

0.055 = 45/ Price

0.055Price = 45

Divide both sides by 0.055;

Price = 45/ 0.055

Price = $818.18

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Sandra Kristof sells furniture for McKinney Furniture Company. Kristof is having financial problems and takes​ $650 that she rec
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Answer:<u><em>The cash register will alert Megan​ McKinney, the​ controller, that something is​ wrong.</em></u>

In this case the cash register provides control over the cash receipts. When Kristof, took the cash from the register , the records from the register will not match the cash in the register.

The cash in the cash drawer will be $650 lower than the amount recorded in the cash register.

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3 years ago
International foods corporation insures its real and personal property, as well as the lives of its key employees, to protect it
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International foods corporation insures its real and personal property, as well as the lives of its key employees, to protect its financial interest should some event undermine its security. this is:____.

Food Security

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3 0
2 years ago
Ratna is preparing q presentation titled "similarities between miceo-leval and marco-lecal orientation in sociology". Which expl
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1 year ago
The stock is currently selling for $17.75 per share, and its noncallable $3,319.97 par value, 20-year, 1.70% bonds with semiannu
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Answer:

the after-tax cost of debt is 13.24

Explanation:

The after-tax cost of debt is the initial cost of debt as a result of the incremental income tax rate.

The after-tax cost of debt is dependent on the incremental tax rate of a business. If profits are low, a business would pay low tax rate, which means that the after-tax cost of debt will increase. Also, if the business profits increase, they would pay higher tax rate, so its after-tax cost of debt will decline.

Given that:

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rs = y + (r -y) x b

after-tax cost of debt = 5.50% + (11.50% - 5.50%) x 1.29

after-tax cost of debt = 13.24%

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3 years ago
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