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Difference between preferred and common stock

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Reference no: EM132510077

1. On December 31, 2019, the share of Amacon Inc. closed at $20. The company subsequently paid a year-end dividend in each of the years 2020 through 2024 as follows:

2020 ?1.0
2021 ?1.0
2022 ?1.0
2023 ?1.25
2024 ?1.25

Suppose you had purchased a share of Amacon stock on Dec 31, 2019. Find the price at which you must sell your share at 2024 year-end in order to realize an annual compounded total rate of return of 10 percent on your initial investment (before commission and taxes)

2. You are required to calculate the intrinsic value of each stock and choose the best company to be invested in.

3. What is the difference between preferred and common stock? If you want higher expected returns, which would you purchase? Explain.

Reference no: EM132510077

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