Problem 1:Brash Corporation initiated a new corporate strategy that fixes its annual dividend at$2.05 per share forever. If the risk-free rate is 4.1% and the risk premium on Brash's stockis11.1%,what is the value of Brash's stock?Problem 2:Slater Lamp Manufacturing has an outstanding issue of preferred stock with a par value of$40 and an 18% annual dividend.a.What is the annual dollar dividend? If it is paid quarterly, how much will be paid eachquarter?If the preferred stock is noncumulative and the board of directors has passed thepreferred dividend for the last 1 quarter. how much must be paid to preferred stockholders inthe current quarter before dividends are paid to common stockholders?If the preferred stock is cumulative and the board of directors has passed the preferredb.С.dividend for the last 1 auarter how much must be paid tonreferred stockholders in the.

Since more than one problem is asked at a time, the answer for first problem is only solved at a…

Problem 1: Brash Corporation initiated a new corporate strategy that fixes its annual dividend at $2.05 per share forever. If the risk-free rate is 4.1% and the risk premium on Brash's stock is11.1%, what is the value of Brash's stock? Problem 2: Slater Lamp Manufacturing has an outstanding issue of preferred stock with a par value of $40 and an 18% annual dividend. What is the annual dollar dividend? If it is paid quarterly, how much will be paid each a. quarter? If the preferred stock is noncumulative and the board of directors has passed the preferred dividend for the last 1 quarter. how much must be paid to preferred stockholders in the current quarter before dividends are paid to common stockholders? b. If the preferred stock is cumulative and the board of directors has passed the preferred C. dividend for the last 1 auarter how much

Problem 1: Brash Corporation initiated a new corporate strategy that fixes its annual dividend at $2.05 per share forever. If the risk-free rate is 4.1% and the risk premium on Brash's stock is11.1%, what is the value of Brash's stock? Problem 2: Slater Lamp Manufacturing has an outstanding issue of preferred stock with a par value of $40 and an 18% annual dividend. What is the annual dollar dividend? If it is paid quarterly, how much will be paid each a. quarter? If the preferred stock is noncumulative and the board of directors has passed the preferred dividend for the last 1 quarter. how much must be paid to preferred stockholders in the current quarter before dividends are paid to common stockholders? b. If the preferred stock is cumulative and the board of directors has passed the preferred C. dividend for the last 1 auarter how much

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Corporation pays a constant $12 dividend on its stock. the company will maintain this dividend for the next 4 years and then it will cease paying dividends forever. If the required return on this stock is 14%, what is the current share price?
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TXS Manufacturing has an outstanding profened stock issue with a par value of 565 per share. The preferred shares pay dividends annually at a rate of 10% What the annual dividend on TXS preferred stock? b. It investors require a return of 8% on this stock and the next dividend is payable one year from now, what is the price of TXS preferred stock? c. Suppose that TXS has not paid dividends on its preferred shares in the past two years, but investors believe that it will start paying dividends again in one year What is the value of TXS preferred stock if it cumulative and it investors require ain) rate of return? The annual dividend on TXS prefered stock $(Round to the nearest cent) -
17
Q: Corn, Inc., has an odd dividend policy. The company has just paid a dividend of $6 per share and has announced that it will increase the dividend by $2 per share for each of the next four years, and then never pay another dividend. suppose you require an 11 percent return on thecompany’s stock.Required:a) how much will you pay for a share today?b) Is the value of this stock dependent upon how long you plan to hold it? would this affect the value of the stock today?c) What happens if a company has a constant growth g that exceeds its cost of capital ks?Will many stocks have expected g> ks in the short run? In the long run (that is, forever)?
6. Cost of common stock or retained earnings. XYZ Corporation just paid a dividend of $1.00 for every share of its common stock and the management sees the dividend can grow 5% a year forever. The stock currently sells for $21. What is the cost of the stock or cost of retained earnings? 10%
The Drogon Company just issued a dividend of $2.36 per share on its common stock. The company is expected to maintain a constant 5 percent growth rate in its dividends indefinitely. If the stock sells for $30 a share, what is the company's cost of equity? Multiple Choice 8.43% 13.26% 13.92% 12.6% 12.87%

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