Timeless Inc just issued a $135 par value preferred stock. The stock pays quarterly dividends and...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Timeless Inc just issued a $135 par value preferred stock. The stock pays quarterly dividends and a 11% dividend rate for the next 20 years. The stock has a required return of 2.4%. (Hint: this means the preferred stock will pay back the par value at the end of the 20th year and then no longer make any further payments afterwards. The dividend rate is like the coupon rate of a bond.) a. What is the price of the stock today? b. Timeless Inc just completed a large project, and it will bring about large amount of profit to them. Therefore, instead of giving out divides for only 20 years, they will give out quarterly dividends till forever. Given that the dividend rate and required return remain the same, what is the price of the stock today? Timeless Inc just issued a $135 par value preferred stock. The stock pays quarterly dividends and a 11% dividend rate for the next 20 years. The stock has a required return of 2.4%. (Hint: this means the preferred stock will pay back the par value at the end of the 20th year and then no longer make any further payments afterwards. The dividend rate is like the coupon rate of a bond.) a. What is the price of the stock today? b. Timeless Inc just completed a large project, and it will bring about large amount of profit to them. Therefore, instead of giving out divides for only 20 years, they will give out quarterly dividends till forever. Given that the dividend rate and required return remain the same, what is the price of the stock today?
Expert Answer:
Answer rating: 100% (QA)
Sure a Price of the stock with limitedlife dividends Since the preferred stock has a limitedlife of ... View the full answer
Related Book For
Posted Date:
Students also viewed these finance questions
-
Q4. The linear momentum p of a body of mass 2 kg varies with time t as p = 3t^2+4 where p and t are in SI units. It follows that the acceleration of the body at t = 2s is: O 3 m/s^2 O O 9 m/s^2 O 12...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
a. Find the nth-order Taylor polynomials for the given function centered at the given point a, for n = 0, 1, and 2.b. Graph the Taylor polynomials and the function. f(x)=x, a = 9
-
Suppose the Japanese yen exchange rate is 121 = $1, and the British pound exchange rate is 1 = $1.53? a. What is the cross-rate in terms of yen per pound? b. Suppose the cross-rate is 189 = 1. Is...
-
Fill in the missing algebraic steps in the derivation of the time dilation equation [Eq. (26-4)] = 1 1 - 1/
-
On April 20, 1992, Daniel Hubbard (plaintiff), a potato farmer, and UTZ Quality Foods, Inc. (UTZ) (defendant), a potato chip manufacturer, entered an installment contract under which Hubbard agreed...
-
You drive on it, walk on it, wear it, and even brush your teeth with it. What is it? Limestone. Its a versatile natural resource found in asphalt highways, concrete sidewalks, cosmetics and...
-
19. Write your first derivative of the following function in the space on the answer sheet. Y 2X2+5X3-X+10 20. Write your first derivative of the following function in the space on the answer sheet....
-
4) From the following information for Epperson Company, prepare in good form a statement of cash flows for the year ended December 31, 2014, using the Indirect method. (12 p.) Amortization of patent...
-
Determine the amount of money earned in an interest bearing account at 4% over 5 years and compounded monthly, if the principal was $20,000
-
How many years will it take $10,000 to grow into one million dollars if it is invested at 4.35% compounded semi-annually?
-
Derive the following items:- 1. Implement Forward Kinematics using D-H parameters 2. Jacobian matrix
-
What are conditions a business activity should fulfill to be a core competency?
-
How do managers contribute to an organization to sustain and a chief a competitive advantage? Explain
-
The school of business dean is forecasting total student enrollment for this year's summer session classes based on the following historical data. year enrollment weights 4 years ago 2000 0.1 3 years...
-
A researcher reports a significant two-way between-subjects ANOVA, F(3, 40) = 2.96. State the decision to retain or reject the null hypothesis for this test.
-
The financial statements of Friendly Fashions include the following selected data (in millions): Required: 1. Calculate the return on equity in 2024. 2. Calculate the dividend yield in 2024. 3....
-
Provide an example of a company with a high-profit margin. Provide an example of a company with a high asset turnover.
-
The general ledger of Red Storm Cleaners at January 1, 2024, includes the following account balances: The following is a summary of the transactions for the year: 1. March 12 Provide services to...
-
Which of the following is a discrete probability distribution? Approach In a discrete probability distribution, the sum of the probabilities must equal 1, and all probabilities must be between 0 and...
-
Graph the discrete probability distribution given in Table 1 from Example 2. Approach In the graph of a discrete probability distribution, the horizontal axis represents the values of the discrete...
-
Compute the mean of the discrete random variable given in Table 1 from Example 2. Approach Find the mean of a discrete random variable by multiplying each value of the random variable by its...
Study smarter with the SolutionInn App