Preferred stock valuation

Reference no: EM13714939

TXS Manufacturing has an outstanding preferred stock issue with a par value of $65 per share. The preferred shares pay dividends annually at a rate of 10%.

a. What is the annual dividend on TXS preferred stock?

b. If investors require a return of 8% on this stock and the next dividend is payable 1 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 last 2 years, but investors believe that it will start paying dividends again in 1 year. What is the value of TXS preferred stock if it is cumulative and if investors require an 8% rate of return?

Reference no: EM13714939

Questions Cloud

Related to a case known as zeta mining : My question is related to a case known as Zeta Mining: Walking the dragline, but I think it would be too time consuming to go through the details. What I'm looking for is more just to get my thinking straight in principle with regards to concep..

Bond interest payments before and after taxes : Bond interest payments before and after taxes Charter Corp. has issued 2 ,500 debentures with a total principal value of $2,500,000. The bonds have a coupon interest rate of 7%. a. What dollar amount of interest per bond can an investor expect to..

The consensus forecast of leading economists : Zane Perelli currently has $100 that he can spend today on polo shirts costing $25 each. Alternatively, he could invest the $100 in a risk-free U.S. Treasury security that is expected to earn a 9% nominal rate of interest. The consensus foreca..

Cash flows from working : It may surprise you that there are cash flows associated with holding a job. Using the examples provided in Chapter 6, construct a simple cash flow statement and payback calculation for when your job expenses will be covered for employment you..

Preferred stock valuation : Preferred stock valuation TXS Manufacturing has an outstanding preferred stock issue with a par value of $65 per share. The preferred shares pay dividends annually at a rate of 10%.a. What is the annual dividend on TXS preferred stock?

Asset valuation and risk : Laura Drake wishes to estimate the value of an asset expected to provide cash inflows of $3,000 per year at the end of years 1 through 4 and $15,000 at the end of year 5. Her research indicates that she must earn 10% on low-risk assets, 15% on..

Houston dialysis center is a department of houston : Houston Dialysis Center is a department of Houston General Hospital, a full-service, not-for-profit acute care hospital with 325 beds. The bulk of the hospital's facilities are devoted to inpatient care and emergency services. However, a 100,0..

Supply company is facing an annual review : An industrial supply company is facing an annual review from its banker, wanting to at least maintain its current line of credit or even increase it in order to support some expansion plans. To satisfy this banker, it's clear that some improv..

What is elcb, rcb and rcd circuit breakers : What is ELCB, RCB and RCD Circuit Breakers ? And what is the advantages of ELCB ? and the disavantages of RCB ?

User Account

All Pages