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VLD [36.1K]
3 years ago
12

8-12 Value of a Preferred Stock A preferred stock from Hecla Mining Co. (HLPRB) pays $3.50 in annual dividends. If the required

return on the preferred stock is 6.8 percent, what is the value of the stock
Business
1 answer:
Sphinxa [80]3 years ago
4 0

Answer:

Value of stock is $51.47

Explanation:

As the preferred dividend is paid by the constant amount or by predetermined rate there is no growth in this case. The price of preferred share is calculated by using perpetuity method.

Price of the stock = Dividend / rate of return

Price of the stock = $3.5 / 6.8%

Price of the stock = $3.5 / 0.068

Price of the stock = $51.47

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<span>Given that a firm has return on assets (roa) of 15 percent, and debt-equity ratio of 60 percent.

Then, equity multiplier = 1 + Debt-equity ratio = 1 + 60/100 = 1 + 0.6 = 1.6

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Therefore, the firm's return on equity is 1.6 x 0.15 = 0.24 = 24%.
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Which of the following should be considered when deciding on a loan?
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Answer:

c. absolute advantage over Kilim.  

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Ithilium, a European country, is able to produce more electronics than Kilim, a North American country, even though both countries use the same amount of resources. Given this information, it can be deduced that Ithilium has absolute advantage over Kilim.  

Comparative advantage refers to when a company produces the same number of outputs with <u>lower opportunity costs </u>while absolute advantage is when a country <u>produces more outputs from less resources</u>.

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7 0
3 years ago
Suppose the market for cantaloupes is unregulated. That is, cantaloupe prices are free to adjust based on the forces of supply a
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Answer:

higher

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Explanation:

When there's a shortage in the market, demand exceeds supply. A shortage can be caused either by an increase in demand or a fall in supply. When there's a shortage prices rise.

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ruslelena [56]

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Explanation:

Because one firm receives a 3.20 overall rating and another receives a 2.80 in a​ CPM, it does not necessarily follow that the first firm is precisely 14.3 percent better than the​ second, but it does suggest that the first firm is better in some areas.

The former firm received such high rating most times because of pedigree or experience or winning rate which does not judge it better than the latter firm in all areas.

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