Issued perpetual preferred stock valuation

Assignment Help Financial Management

Reference no: EM13923060

Preferred stock valuation

Ezzell Corporation issued perpetual preferred stock with a 8% annual dividend. The stock currently yields 10%, and its par value is $100.

What is the stock's value? Round your answer to two decimal places.

Suppose interest rates rise and pull the preferred stock's yield up to 13%. What would be its new market value? Round your answer to two decimal places.

ANSWER AND EXPLAIN FULLY

Reference no: EM13923060

Questions Cloud

Target capital structure with no preferred stock : Cost of Common Equity and WACC Patton Paints Corporation has a target capital structure of 35% debt and 65% common equity, with no preferred stock. Its before-tax cost of debt is 8% and its marginal tax rate is 40%. The current stock price is P0 = $3..

Evaluating the possible replacement of equipment : A company is evaluating the possible replacement of equipment. New equipment would cost $90,913, and sales tax on the purchase would be 3%. Both the purchase price and sales tax would be capitalized.

Price is determined by investor bids : Which one of the following is an underwriting of securities where the offer price is determined by investor bids?

About the nonconstant growth : Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $1.75 coming 3 years from toda..

Issued perpetual preferred stock valuation : Ezzell Corporation issued perpetual preferred stock with a 8% annual dividend. The stock currently yields 10%, and its par value is $100. What is the stock's value?

Shares of common stock outstanding : Dinklage Corp. has 5 million shares of common stock outstanding. The current share price is $71, and the book value per share is $6. The company also has two bond issues outstanding. The first bond issue has a face value of $65 million, a coupon of 6..

Empirical evidence shows-financial market price movements : Empirical evidence shows that financial market price movements are essentially random. Financial markets are reasonable efficient markets. Financial markets are NOT efficient markets.

What are the effects on the after-tax profits-cash flow : A project currently generates sales of $11.5 million, variable costs equal to 40% of sales, and fixed costs of $3.5 million. The firm’s tax rate is 35%. What are the effects on the after-tax profits and cash flow, if sales increase from $11.5 million..

What is the total cost of the watch radio for the five years : Dick Tracy builds a two way wrist radio for $8,000. It costs Dick $1800 a year to operate the radio. Dick uses the wrist radio for 5 years before upgrading the electronics for $3000. What is the total cost of the watch radio for the 5 years? Dick has..

User Account

All Pages