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o-na [289]
2 years ago
10

A convertible preferred stock is convertible at $10, pays a 4% annual dividend, is callable at $110, and is trading at a current

market price of $116. Based on these details, what is the parity price of the common stock
Business
1 answer:
Leno4ka [110]2 years ago
4 0

Answer:

$11.60

Explanation:

In ascertaining the parity price of the common stock, we need to ascertain the conversion ratio which is the par price of the preferred stock divided by the convertible price

The par value of the preferred stock=$100(since call price is $110)

convertible price=$10

conversion ratio=$100/$10=10

The parity price is the current market price of the preferred stock divided by the conversion ratio

Parity price=$116/10

Parity price=$11.60

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Management team of Wolverine Corp. is considering the purchase of a new piece of equipment. They believe that new equipment is m
muminat

Answer:

Wolverine Corp.

a. The accounting rate of return = 50%

b. The payback period = 6 years ($200,000 * 6)

c. The net present value = ($39,600)

d. The net present value at 15% = ($237,200)

Explanation:

a) Data and Calculations:

Initial investment cost in new equipment = $1,200,000

Annual incremental net income from cost savings = $200,000

Salvage value of the new equipment = $200,000

Estimated useful life of equipment = 8 years

Hurdle rate = 10%

a. Accounting rate of return = (($200,000 * 8 + $200,000) - $1,200,000)/$1,200,000

= ($1,800,000 - $1,200,00)/$1,200,000

= $600,000/$1,200,000 * 100 = 50%

NPV at 10% hurdle rate:

Initial investment = $1,200,000 * 1 = $1,200,000

Annual incremental savings:

= $200,000 * 5.335 =                        $1,067,000

Salvage value = $200,000 * 0.467         93,400

Total benefits                                     $1,160,400

NPV =                                                    ($39,600)

NPV at 15% hurdle rate:

Initial investment = $1,200,000 * 1 = $1,200,000

Annual incremental savings:

= $200,000 * 4.487 =                           $897,400

Salvage value = $200,000 * 0.327         65,400

Total benefits                                      $962,800

NPV =                                                  ($237,200)

4 0
2 years ago
The opportunity cost of a choice is the _____ of the opportunities lost.a. Valueb. Interest
vlada-n [284]

Answer:

value

Explanation:

Opportunity cost or implicit is the value of the option forgone when one alternative is chosen over other alternatives.

For example, if I leave by job where i earn $100,000 per year to study economics in college. My opportunity cost is $100,000. This is the amount i would have been earning if i didn't go to college

5 0
2 years ago
Police agency positions in victim advocacy and statistical analysis are examples of ______ personnel.
UkoKoshka [18]

They are examples of non sworn personnel

6 0
3 years ago
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Pani-rosa [81]
Lots of credit card rewards.
7 0
2 years ago
Mandy’s Packaging Inc. is a multibillion-dollar supplier of packaging materials. One of its salespeople rearranged production sc
daser333 [38]

Answer:

<u>Relationship selling</u>

Explanation:

Relationship selling is focussed more upon successfully building a long term relationship between a seller and a buyer rather than being merely focussed upon effecting a sales through .

The technique emphasizes upon the quality of interaction between the seller and the buyer which shall serve as a basis for develoment of a future relationship between the company and the customer.

This technique is prominent in case of those companies that rely on repetitive purchases on part of the buyer like private instructors. Good relationships may lead to customer loyalty which prompt repetitive purchases at their end.

In the given case, the supplier company's sales person rearranged production schedule so as to accomodate unexpected demand from a major client. Such an action demonstrates company's sales policy with emphasis upon relationship selling.

3 0
3 years ago
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