Common Stock and Preferred Stock | |||

PROBLEM 1 | |||

PREFERRED STOCK VALUATION | |||

1) What is the value of the preferred stock when the dividend rate is 14% and the par value is $100? The discount rate is 12%. | |||

Dividend rate | 14.0% | ||

Par value | $100.00 | ||

Discount rate | 12.0% | ||

Present Value | |||

PROBLEM 2 | |||

PREFERRED STOCK VALUATION | |||

2) Assume a preferred stock is selling for $33 per share in the market and pays a dividend of $3.60 annually. | |||

Market price | $33.00 | ||

Dividend | $3.60 | ||

a) return | |||

b) value | |||

c) invest? | |||

PROBLEM 3 | |||

COMMON STOCK VALUATION | |||

3) A common stock paid $1.32 in dividends last year and is expected to grow indefinitely at an annual rate of 7%. What is the value of the stock if you require a return of 11%? | |||

Growth rate | 7.0% | ||

Dividend | $1.32 | ||

Required rate | 11.0% | ||

Value | |||

PROBLEM 4 | |||

COMMON STOCK VALUATION | |||

4) A common stock paid $1.32 in dividends last year. Dividends are expected to grow at 8% annually indefinitely. | |||

Dividends last year | $1.32 | ||

Dividend growth | 8.0% | ||

Current market price | $23.50 | ||

a) expected rate of return | |||

b) required return | 10.50% | ||

value | |||

c) invest? | |||

Instructions

1) What is the value of the preferred stock when the dividend rate is 14% and the par value is $100? The discount rate is 12%.

2) Assume a preferred stock is selling for $33 per share in the market and pays a dividend of $3.60 annually.

a) What is the expected rate of return on the stock?

b) If you require a 10% rate of return, what is the value of the stock to you?

c) Would you invest in the stock? Explain.

3) A common stock paid $1.32 in dividends last year and is expected to grow indefinitely at an annual rate of 7%. What is the value of the stock if you require a return of 11%?

4) A common stock paid $1.32 in dividends last year. Dividends are expected to grow at 8% annually indefinitely.

a) If the stock currently sells at $23.50 per share, what is the stock’s expected return?

b) If you require a return of 10.5%, what is the value of the stock for you?

c) Should you make the investment? Explain.

Bond Valuation and Yield | ||

A bond has a par value of $1,000, pays $70 semiannually and has a maturity of 15 years. | ||

1) If the bond earns 12% per year, what is the price of the bond? | ||

Rate | ||

Nper | ||

PMT | ||

FV | ||

Type | ||

PV | ||

2) What is the yield to maturity for the bond? | ||

Nper | ||

PMT | ||

PV | ||

FV | ||

Type | ||

Rate | ||

3) What would be the bond’s price if the rate earned declined to 8% per year? | ||

Rate | ||

Nper | ||

PMT | ||

FV | ||

Type | ||

PV | ||

4) If the maturity period is reduced to 10 years and the required rate of return is 8%, what would be the price of the bond? | ||

Rate | ||

Nper | ||

PMT | ||

FV | ||

Type | ||

PV | ||

5) What is the yield to maturity for the bond when the maturity is 10 years and the required rate of return is 8%? | ||

Nper | annualized | |

PMT | ||

PV | ||

FV | ||

Type | ||

Rate | ||

6) What generalizations about bond prices, interest rates, and maturity periods can be made based on the calculations made above? | ||

Try it now!

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

Quality Essay Help has stood as the world’s leading custom essay writing services providers. Once you enter all the details in the order form under the place order button, the rest is up to us.

Essays

At Quality Essay Help, we prioritize on all aspects that bring about a good grade such as impeccable grammar, proper structure, zero-plagiarism and conformance to guidelines. Our experienced team of writers will help you completed your essays and other assignments.

Admissions

Admission and Business Papers

Be assured that you’ll definitely get accepted to the Master’s level program at any university once you enter all the details in the order form. We won’t leave you here; we will also help you secure a good position in your aspired workplace by creating an outstanding resume or portfolio once you place an order.

Editing

Editing and Proofreading

Our skilled editing and writing team will help you restructure you paper, paraphrase, correct grammar and replace plagiarized sections on your paper just on time. The service is geared toward eliminating any mistakes and rather enhancing better quality.

Coursework

Technical papers

We have writers in almost all fields including the most technical fields. You don’t have to worry about the complexity of your paper. Simply enter as much details as possible in the place order section.