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Drupady [299]
3 years ago
11

E-eyes.com has a new issue of preferred stock it calls 20/20 preferred. the stock will pay a $20 dividend per year, but the firs

t dividend will not be paid until 20 years from today. the required return on the stock is 7.25 percent. what is the price of the stock 19 years from today
Business
1 answer:
Sophie [7]3 years ago
7 0

The price of the stock 19 years from now would be the present value of all the dividends to be paid starting year 20. Here, to compute the PV of the dividends, we can use the PV of perpetuity formula as the dividends will be paid for the infinite period of time.

Value of the stock after 19 years = Dividend year 20/ required return

= $20 / 0.0725

= $275.86

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Golden Harvest is a restaurant located inside a five-star hotel. It caters mainly to customers who are concerned about quality d
Nikolay [14]

<u>D. A premium rooftop restaurant in the same city</u> will be a part of Golden Harvest's strategic group.

<u>Explanation</u>:

A 5 Star Hotel is a hotel that provides a luxury service to its customers through its operation. It is operated to serve their guest at high level. The materials, tables and each and everything used in the five-star hotel are set with high quality. They provide utmost care to their guest.

In the above scenario, Golden Harvest is the restaurant that is operated inside a five-star hotel. They provide quality dining to their customers. The customers visiting the restaurant expect only the quality and they don’t bother about the prices.

This shows that <u>a premium rooftop restaurant in the same city will be a part of Golden Harvest’s strategic group. </u>

3 0
3 years ago
Sheffield Corp. has 285,000 shares of $8 par value common stock outstanding. It declares a 13% stock dividend on December 1 when
astra-53 [7]

Answer:

285,000 common stock outstanding with a $8 par value

it declares 13% stock dividend

market price at $16

since the stock dividend is considered small (less than 20%), we use the market price to record it

December 1, 202x stock dividends are declared (37,050 stocks)

Dr Retained earnings 592,800

    Cr Common stock dividends distributable 296,400

    Cr Additional paid in capital 296,400

December 31, 202x, distribution of stock dividends

Dr Common stock dividends distributable 296,400

    Cr Common stock 296,400

3 0
3 years ago
An RR sold shares of new stock issue of ABC Corp. to a customer at $20 per share. After a week, ABC is selling at $10. The RR of
Vanyuwa [196]

Answer:

It is a violation of NASD rules against guaranteeing a customer against loss.

Explanation:

In this case the RR is guaranteeing the customer against loss. The customer initially bought the shares for $20 the new price is $10. The RR now coming in to buy the shares above market value is a way to guarantee the customer against loss, and its a NASD violation.

7 0
3 years ago
When the economy is operating at point C, the Federal Reserve may decrease the discount rate to
brilliants [131]

Answer:

D ; increase growth

Explanation:

The discount rate is one of the tools that the Federal Reserve uses to direct monetary policy.  Banks are subject to minimum reserves requirements. If a bank falls below this minimum, it can borrow from the banks with a surplus,  or borrow from the federal reserve. If it borrows from the Fed, the interest rate that applies is the discount rate. The discount rate is always higher than the fed fund rate; hence, banks use it as a last resort.

The discount rate and the fed rate have similar effects on the economy.  The Fed uses the discount rate to regulate the money supply in the country. When the growth in slow, the fed will reduce the discount rate.  A low discount rate means the cost of borrowing money goes down. The impact is that individuals and businesses will afford to borrow money for consumption and investment.

Increased levels of investments and consumption will mean a higher GDP, which is growth.

7 0
3 years ago
Sweet Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested construction
Reika [66]

Answer:

$4,775,565.49

Explanation:

The computation of the selling price of the bond is shown below:

Particulars                  Amount PV factor 6%       Present value

Semi-annual interest $216,209 19.60044    $4,237,791.53

Principal                         $3,088,700     0.174110131  $537,773.96

Total                                                       $4,775,565.49

Working notes

Semi-annual interest $216,209 = $3,088,700 × 14% × 6 ÷ 12

PV factor 3%:    

Semi-annual interest 13.76483115      = {(1 - (1.06)^-30) ÷ 0.06 }

Principal 0.174110131  = {1 ÷ 1.03^30}

6 0
3 years ago
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