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NemiM [27]
3 years ago
10

International Imports (I2) pays an annual dividend rate of 10.40% on its preferred stock that currently returns 13.94% and has a

par value of $100.00 per share. What is the value of I2’s preferred stock? $100.00 per share $74.61 per share $111.91 per share $89.53 per share Suppose that due to high inflation, interest rates rise and pull the preferred stock’s yield to 18.12%. The value of the preferred stock will .
Business
1 answer:
skelet666 [1.2K]3 years ago
3 0

Answer:

$74.61 per share , decrease.

Explanation:

First calculate value of preferred share if return is  13.94% ;

Value of preferred share =(Annual dividend rate  * Par value)/ Rate of return

Value = (0.1040* 100)/0.1394

Value = 10.40/ 0.1394

Value = $74.61

Next, calculate value of preferred share if return is  18.12% ;

Value of preferred share =(Annual dividend rate  * Par value)/ Rate of return

Value = (0.1040* 100)/0.1812

Value = 10.40/ 0.1812

Value = $57.40

Since the value has gone from $74.61 to $57.40, it means that the value will DECREASE.

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Answer:

The options are

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Intra period cash flow is defined as the flow which occurred in a certain period of time. In the example above , the cash flow occurred within quarterly reporting period of time.

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olchik [2.2K]

Answer:

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