How much would he have paid for bank of america preferred

Assignment Help Finance Basics

Reference no: EM13275919

In August, 2011, Warren Buffett decided to make an investment in Bank of America by purchasing a large amount of preferred stock. The terms of the investment were that Bank of America would pay Buffett a fixed dividend of $300 million every year and that the investment would last indefinitely. (Because the transaction had no maturity or end date, it can be considered a perpetuity.) In prior deals with General Electric and Goldman Sachs, Buffett had demanded a 10% rate of return. If he had wanted to achieve a 10% rate of return on his Bank of America investment, how much would he have paid for the Bank of America preferred stock? (Note that 10% was not the actual rate Buffett used for this transaction; we'll compare the answer we get for this problem to the transaction's actual terms in class on Friday.)

Reference no: EM13275919

Questions Cloud

Find maximum power is could deliver to a well chosen rl : A certain practical dc voltage source can provide a current of 5.5A when it is (momentarily) short-circuited, and can provide 28W to a 20Ω load. Find a.)The open-circuit voltage b.)The maximum power is could deliver to a well chosen RL

Estimate the coefficient of static friction : A 6.0-kg block is at rest on a horizontal floor. If you push horizontally on the 6.0-kg block with a force of 24.0 N, it just starts to move. What is the coefficient of static friction

Design circuit to add two 2-bit numbers using 4-bit adder : Design a circuit to add two 2-bit numbers using a 7483 4-bit adder. Use 2 switches on the designer to input 1 value and 2 other switches to input the other value. 1)The 7483 adds 2 4-bit values. What must be done with the unused inputs

Display substantial mastery of the literature : Was the French Revolution primarily the work of a single class or the French people as a whole?

How much would he have paid for bank of america preferred : If he had wanted to achieve a 10% rate of return on his Bank of America investment, how much would he have paid for the Bank of America preferred stock?

At what coordinate on x axis is the electric field produced : Two particles are fixed to an x axis: particle 1 of charge q1 = 2.32 x 10-8 C at x = 27.6 cm and particle 2 of charge q2 = -5.98q1 at x = 60.4 cm. At what coordinate on the x axis is the electric field produced by the particles equal to zero

Compute the self-induced emf in the solenoid : A technician wraps wire around a tube of length 40.0 cm having a diameter of 7.90 cm. find the self-induced emf in the solenoid?

Compute the period of the spacecrafts orbit : A spacecraft is in orbit around a planet. The radius of the orbit is 2.9 times the radius of the planet (which is R = 71451 km), What is the period of the spacecraft's orbit

User Account

All Pages