Pecan Theatre Inc. owns and operates movie theaters throughout Florida and Georgia. Pecan Theatre has declared the following ann
ual dividends over a six-year period: Year 1, $24,000; Year 2, $48,000; Year 3, $108,000; Year 4, $132,000; Year 5, $168,000; and Year 6, $216,000. During the entire period ended December 31 of each year, the outstanding stock of the company was composed of 20,000 shares of cumulative preferred 3% stock, $100 par, and 100,000 shares of common stock, $15 par.1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears at the beginning of 20Y1. Summarize the data in tabular form. If required, round your answers to two decimal places. If the amount is zero, please enter "0".
1 answer:
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Answer:
The annualized return of the investment is R=0.286 or 28.6%.
Explanation:
The expected value takes into account all the possible outcomes and their probabilities. In this case, there are only 2 possible outcomes:
1) Mexican government lose control of the economy. Probability: 25%.
2) The Mexican government don't lose contol of the economy. Probability: 75%
In the Case 1, the local stock market will fall by 10% and the peso will lose 20%.
The return in dollars can be calculated as:
being ΔSM the return of the stock market and ΔP the apreciation of the peso.
For the Case 2, we have that the local stock market will rise by 5% and the peso will appreciate by 5%.
The return in this case is
Then, the expected value is:
The expected dollar return in the 90 days is R=0.065.
If we annualized, the annual rate of return of this investment is: