What is the present value of $5,000 due in ten years assuming money grows according to compound interest and the annual effectiv
1 answer:
Answer:
$ 3,085
Explanation:
Given that;
The present value(PV) ------ ???
Future payment (F) ---- $5,000
The annual effective rate are 4%, 5% and 5.5% respectively, which can be illustrated as;
r = 0.04, 0.05 and 0.055 respectively.
The present value formula is given as:
PV = 5000 × (1.04)⁻³(1.05)⁻²(1.055)⁻⁵
= $ 3,084.814759
≅ $ 3,085
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Answer:
See the attached photo for the completed the schedule.
Explanation:
Note: See the attached photo for the completed the schedule.
In the attach excel file, the following formulae and calculations are used:
Peferred stock dividend per share = Total cumulative preferred stock dividend paid in a year / Number of cumulative preferred shares
Common stock dividend per share = Total common stock dividend paid in a year / Number of common shares
Total cumulative preferred stock dividend = Number of cumulative preferred stock * Par value * Dividend rate = 2,500 * $100 * 10% = 2,500 * $100 * 10% = $25,000
Outstanding cumulative preferred stock dividend in Year 1 = Total cumulative preferred stock dividend - Total cumulative preferred stock dividend paid in Year 1 = $25,000 - $10,000 = $15,000
Outstanding cumulative preferred stock dividend in Year 2 = Outstanding cumulative preferred stock dividend in Year 1 = $15,000
Total cumulative preferred stock dividend paid in Year 3 = Total cumulative preferred stock dividend + Outstanding cumulative preferred stock dividend in Year 2 = $25,000 + $15,000 = $40,000
Total common stock dividend paid in Year 3 = Dividend distributed in Year 3 - Total cumulative preferred stock dividend paid in Year 3 = $60,000 - $40,000 = $20,000
