?? JTM Enterprises has an issue of preferred stock with a par value of $200. The preferredstock pays a 7% dividend, and investors demand a 6.25% rate of return. Additionally, JTMEnterprises incurred $5,000 in maintenance costs last year. What price should the preferredstock sell for? Sunrise Retailers Ltd. has 6,500 shares of 7%, $25 par cumulative preferredstock, and 120,000 shares of $3 par common stock outstanding. Preferred dividends are 1year in arrears. The board of directors has approved a $3.00 cash dividend on each share ofcommon stock. The company also had a $2,000 legal settlement that does not affectdividends.

Step 1:To calculate the price of JTM Enterprises' preferred stock, we can use the dividend…

Answered: JTM Enterprises has an issue of…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 5P

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Mayo Inc.'s perpetual preferred stock sells for $97.50 per share, and it pays an $8.50 annual dividend. What is the company's cost of preferred stock for use in calculating the WACC? Show work in excel and explain answer
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