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AlekseyPX
2 years ago
10

Moraine, Inc., has an issue of preferred stock outstanding that pays a $5.35 dividend every year in perpetuity. If this issue cu

rrently sells for $93 per share, what is the required return
Business
1 answer:
MA_775_DIABLO [31]2 years ago
4 0

Answer:

5.75%

Explanation:

the required rate of return for a preferred stock can be calculated by dividing the preferred dividend by the current market price:

  • required rate of return = $5.35 / $93 = 5.75%

The preferred dividend is fixed, but the market price varies depending on the required rate of return.

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SUPPLY

LAW OF SUPPLY

Explanation:

Supply is the buyer's ability & willingness to sell at a given price, period of time.

Law of Supply states : Positive relationship between price & quantity demanded, other factors remaining constant. It implies higher price increases supply, lower price decreases supply (other factors same)

3 0
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You can spend $10 for lunch and you would like to purchase two cheeseburgers. When you get to the restaurant, you find out the p
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3 years ago
The Geostar Company, leading manufacturer of wireless communication devices, is considering three cost-reduction proposals in ts
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Answer: Alternative 3 will be selected.

Explanation:

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First compare A1 to A0

The rate of return here is 18% which is higher than the MARR of 15% so Alternative 1 should be chosen over A0 which is to do nothing.

Compare A1 to A2

If A2 is chosen over A1, the incremental return is 10% which is less than the MARR of 15% so A2 should not be chosen over A1. A1 should instead be chosen over A2.

Compare A1 to A3

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Alternative 3 should be chosen over A1 which should be chosen over A2 and A0.

A3 will therefore be selected.

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