Preferred dividends = preferred shares x Par value of 1 preferred stock x Preferred dividend rate
Preferred dividend = 6000 shares x 11% x $2 = $1320
Total dividend paid in year 1= $640
Preferred stockholders will receive a cash dividend of $640 in the first year. Because preferred stocks are not cumulative, there will be no preferred stock divided in arrears in year 1.
Arrear of dividends = $1320 - $640 = $680
Total dividend in year 2 = $2190
Dividend paid on common stock in year 2 = dividend paid in year 2 - Annual preferred dividends
=> 2190 - 1320 = $870
Answer:
required return on the company's stock = 11%
Value of each share =$88.51
Explanation:
The constant growth model states that 
. If ke is made subject of formular, 
.
This implies that ke= dividend yield plus growth rate = 6%+5%=11%. Therefore the required return on the company's stock = 11%
Values of each share = 
.
where 
and P3= 
Value of each share = 
= 88.51
Answer:
Long-term investments.
Explanation:
Capital budgeting can be regarded as process that is been utilized by business in determining the type proposed fixed asset purchases that need to be declined or should be accepted. This process helps in creating quantitative view as regards the proposed fixed asset investment, so that rational basis to make make a judgment can be surfaced. It should be noted that Capital budgeting is the process of analyzing Long-term investments.
Answer:
d) measures the amount of extra fixed costs planned for but not used
Explanation:
An unfavorable production-volume variance <u>measures the amount of extra fixed costs planned for but not used</u>. As per production-volume variance extra fixed costs planned for but not used has unfavorable production-volume variance.
When production-volume variance is unfavorable, that means the fixed cost are allocated on lesser number of manufactured units, hence it indicates that the fixed costs are not controlled well.
Answer:
A) They would be indifferent, as Sally's income net of costs equals $25,000.
Explanation:
Sally's economic profit = accounting profit - opportunity costs
- accounting profit = $12,000
- opportunity costs = $25,000 - $15,000 in lost salaries + $2,000 (lost investment revenue) = $12,000
economic profit = $12,000 - $12,000 = $0
Since the economic profit is $0, Sally should be indifferent between running her own business or working for someone else.
