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mihalych1998 [28]
3 years ago
7

Earley Corporation issued perpetual preferred stock with a 10% annual dividend. The stock currently yields 8%, and its par value

is $100. Round your answers to the nearest cent. What is the stock's value? $______
Suppose interest rates rise and pull the preferred stock's yield up to 13%. What is its new market value? $______
Business
1 answer:
Lubov Fominskaja [6]3 years ago
5 0

Answer:

Explanation:

The value of the preferred stock would be

= Annual dividend ÷ annual yield

= $100 × 10% ÷ 8%

= $10 ÷ 8%

= $125 per share

And, the new market value would be

= Annual dividend ÷  annual yield

= $10 ÷ 13%

= $76.92 per share

For computing the stock value or market value we simply divide the annual dividend by the annual yield

You might be interested in
Trisha makes purses out of old blue jeans and sells them to customers at local craft fairs. what type of marketing channel does
Anettt [7]

Answer:

Direct.

Explanation:

No intermediaries are used to provide goods and services to customers . Typically seller is the manufacturer or an individual.

5 0
3 years ago
If the price of good X increases by 2%, and that causes the quantity demanded of good Y to decrease by 15%, then the cross elast
Zina [86]

Answer:

-7.5%

Explanation:

Cross elasticity of demand is the degree of responsiveness of the quantity of a commodity, Y in this case, to the change in the price of another commodity, X in this case.

Cross elasticity of demand is measured as a percentage change in the quantity of commodity Y divided by the percentage in the price of commodity Y. This can be written mathematically as follows:

Ec = % Change in the quantity of commodity Y divided by the percentage in the prie of commodity X.

Where Ec denoted cross elasticity.

Applying the formula to this question, we have

Ec = -15%/2% = -7.5%

Note that under cross elasticity of demand:

1. Two goods are substitute if the value of their cross elasticity of demand is positive. That is, an increase in the price of good one, good X, will lead to an increase in the quantity demand of the second, good Y.

2.  Two goods are complimentary if the value of their cross elasticity of demand is negative.That is, an increase in the price of good one, good X, will lead to an decrease in the quantity demand of the second, good Y.

Therefore in this question, goods X and Y are complimentary because the value of their cross elasticity of demand is -7.5% which is negative.

I wish you the best.

4 0
3 years ago
Diane has created the following code:
Effectus [21]
C is your answer (ik it’s likely a little late now, but this will help others who need it‍♂️)
7 0
3 years ago
Suppose there are only two firms in an economy: Cowhide, Inc. produces leather and sells it to Couches, Inc., which produces and
ratelena [41]

Answer:

$57,000

Explanation:

The calculation for GDP only takes into account the final, market value, of finished goods and services. The value of intermediate goods (those that are transformed into other goods during the year) is not taken into account.

In this case, we have 20 couches that were finished and sold for $2,600. They are part of GDP under their market value. Their total contribution to GDP is:

20 couches x $2,600 = $52,000

Cowhide, Inc. produced 25 units of leather, each worth $1,000. 20 of them were bought by Couches, Inc. and transformed into couches. As a result, those 20 units are not counted on GDP.

The remaining 5 units of leather are part of GDP because they are finished goods which have not been transformed into anythign else. Even if Couches, Inc. has promised to buy those 5 units of leather, it would only do so in 2016, and a promise is not necessarily a certainty.

The contribution of the 5 units of leather to GDP is:

5 units of leather x $1,000 = $5,000

Finally, we add up the two figures to obtain total GDP:

GDP = $52,000 + $5,000

        = $57,000

3 0
3 years ago
Assume that on July 1, Jerome, Inc., paid $100,000 to buy Potter's 8 percent, two-year bonds with a $100,000 par value. The bond
Alinara [238K]

Answer:

Dr Potter's 8% Bonds 100000

Cr Cash 100000

Dr Cash 4000

Cr Interest from Bonds 4000

Explanation:

Preparation of the journal entry to Complete the necessary December 31 entry to record

July, 1

Dr Potter's 8% Bonds 100000

Cr Cash 100000

(Being 8% Bonds purchased)

December, 31

Dr Cash 4000

Cr Interest from Bonds 4000

(100,000*8%*1/2)

(Being Interest received on 8% Bonds)

5 0
2 years ago
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