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.

Price of Preferred Stock=Dividend/Required Rate of ReturnGiven information:Par value of the…

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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Walker Machine Tools has 6.3 million shares of common stock outstanding. The current market price of Walker common stock is $68 per share rights-on. The company’s net income this year is $21.50 million. A rights offering has been announced in which 630,000 new shares will be sold at $62.50 per share. The subscription price plus six rights is needed to buy one of the new shares.a. What are the earnings per share and price-earnings ratio before the new shares are sold via the rights offering? (Do not round intermediate calculations and round your answers to 2 decimal places.) earnings per share price-earnings ratio b. What would the earnings per share be immediately after the rights offering? What would the price-earnings ratio be immediately after the rights offering? (Assume there is no change in the market value of the stock, except for the change when the stock begins trading ex-rights.) (Do not round intermediate calculations and round your answers to 2 decimal…
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