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nasty-shy [4]
3 years ago
12

Sixth fourth bank has an issue of preferred stock with a $6.10 stated dividend that just sold for $123 per share. what is the ba

nk's cost of preferred stock? (do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places,
e.g., 32.16.) cost of preferred stock %
Business
1 answer:
Darya [45]3 years ago
3 0
A preferred stock is a class of possession in a company that has a developed claim on its properties and incomes than common stock. 
The formula would be:
RE = D1 / P1
RE = 6.10 / 123
RE = 0.0496
Multiply this to 100%
Bank's cost of preferred stock is 4.96%
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Hailey Corporation pays a constant $9.45 dividend on its stock. The company will maintain this dividend for the next 13 years an
Sloan [31]

Answer:

$64.76

Explanation:

The current share price can be determined by calculating the present value of the dividend

Present value is the sum of discounted cash flows

Present value can be calculated using a financial calculator

Cash flow from year 1 to 13 = 9.45

I = 10.7

PV = 64.76

To find the PV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.  

3. Press compute  

5 0
3 years ago
The records of Pippins, Inc., included the following information: Net sales $ 1,000,000 Gross margin 475,000 Interest expense 50
Lelu [443]

Answer:

Times interest earned (TIE) = 7.4 times

Explanation:

The times interest earned (TIE) ratio is a measure used to analyze the company's ability to meet its debt obligations on the basis of its current income level. The TIE ratio is calculated as follows,

Times Interest Earned (TIE)  =  EBIT / Total Interest expense

Where,

  • EBIT is the earnings of the company before interest and tax

To calculate TIE, we first need to determine the EBIT. EBIT can be calculated by backward working. Thus, EBIT is:

EBIT = Net income + tax + interest expense

EBIT = 240000 + 80000 + 50000

EBIT = $370000

Times interest earned (TIE) = 370000 / 50000

Times interest earned (TIE) = 7.4 times

6 0
3 years ago
According to the CAPM, what is the expected market return given an expected return on a security of 17.2%, a stock beta of 1.6,
seropon [69]

Answer:

Expected market return is 13%

Explanation:

CAPM is used to calculate the expected return on an asset for decision making to add any further asset to a well diversified portfolio. It involves different factors like market risk premium, asset beta and risk free rate as well to calculate a return rate which is expected to obtain from underline asset or investment.

As per given data

Expected return = 17.2%

Stock beta = 1.6

Risk free rate = 6%

According to CAPM

Expected Return on security = Risk free rate + Stock beta ( Market Risk Premium )

17.2% = 6% + 1.6 × ( Market Risk Premium )

17.2% = 6% + 1.6 × ( Market return - Risk free rate )

17.2% = 6% + 1.6 × ( Market return - 6% )

17.2% - 6% = 1.6 × ( Market return - 6% )

11.2% = 1.6 × ( Market return - 6% )

11.2% / 1.6 = Market return - 6%

7% = Market return - 6%

7% + 6% = Market return

Market return = 13%

3 0
3 years ago
Question 1 which of the follow will happen if you miss a monthly credit card payment?
Stells [14]
What can happen if you miss a monthly credit card payment is that you will be charged a late fee, and you can also lose rewards points.
Hope this helps!
6 0
3 years ago
Suppose an economist tests the theory that when the price of leather increases, fewer pairs of shoes are produced. He observes m
Salsk061 [2.6K]

Answer:

b. cannot test his theory because his observations violate the ceteris paribus assumption

Explanation:

As per the law of supply, when price of an input rises, quantity supplied of a good falls, keeping other factors affecting supply as constant (ceteris paribus).

Leather and Shoes are complimentary goods in the sense that leather serves as an input for the product i.e shoes. So if the price of leather rises, production of shoes would fall, keeping other factors constant.

When the price of an input rises, the quantity supplied falls, keeping other factors affecting supply as constant.

In the given case, the price of inputs has increased and yet the production of shoes has increased owing to an advancement in the technology. Technology is a different determinant of quantity supplied and considered as an other factor affecting supply.

5 0
3 years ago
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