What is the cost of trade credit to the firm

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Reference no: EM132053201

1. Preferred Stock ABC pays 8% of par value 1000 as fixed dividend forever. If your required rate of return is 10%. How much are you willing to pay for this preferred stock of 1000 par value? You must round up your answer to integer (For example, if your answer is 365.67, you must write 366).

2. Suppose a firm purchases goods on credit with terms of 3/10, net 25. What is the cost of trade credit (APR) to the firm if it always pays its bill on Day 8 or sooner? In your computations, assume there are 360 days in a year. (answer no percentage, whole number only)

Reference no: EM132053201

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