ters 6 & 7 0 Help Save & Exit Submit 8. Problem (2 parts) Needing to raise more capitol, you advised the board to issue more shares of preferred stock. The dividend is $6.40 every year, not increasing. In perpetuity. Your investors require a rate of return of 792%. a. What is the current price? (Do not round Intermediate calculations and enter your answer as a dollar amount rounded to 2 decimal places, e... 12.34.) a. Current price b. What formula did you use to solve this problem in part a? (Write the number of the formula from your formula sheet) . Formula number ? ? Question 4 - Exam 2 (Chapters 6 & 7) - Connect A Bond's Annual interest Divi 1 D PE 2 Pt= (R-g) Price/share 5 PE EPS Earnings (Revenue - Cost) 6 EPS = # shares outstanding D 7 EPS; = DPR Dt 8 DPR = EPSE R= Det + 8 Pt 3 DY= Annual Dividend Price 4 New Price - Old Price CGY = Old Price 9 11 13 12 CY Annual Coupon Price CGY = New Price - old Price Buy Price 1- YT MODE 15 PB 1 (1+YTM) YTM = C F (1+YTM) 17 1 (1+r) 1 1 (1+r 16 DAT 10 Price = Benchmark PE ratio x EPS 11 Price = Benchmark P/S ratio x Sales/Share 14 ce (1+R) = (1+r)(1+h) 1 (1+r)" (1+r) r 11 Price Old Price 9 11 Price = Benchmark P/S ratio x Sales/Share 14 12 CY= Annual Coupon Price 13 New Price -old Price CGY = Buy Price (1+R) = (1+r)(1+h) 15 PB = C [14 (1+YTM YTM F (1+YTM) 17 16 (1+r) (1+r) PVA= PMT PVADEPMT (1 + r) r r |(1+r)" -1 [(4-1-1 18 FVA= PMT 19 FVAD: PMT (24)" - 4 (1+r) PVA PMT= PMT 20 PVp= 21 1 r (1+r) r