XYZ, Inc. just paid an annual per share dividend of $3.50. Dividends are expected to grow at a rate of 3% per year from here on out. If the risk-free rate is 2.5%, the expected return on the market is 7% and the beta of the stock is 2, what is the most that you should be willing to pay for a share of this stock today?

Answers

Answer 1

Answer:

P0 = $42.4117 rounded off to $41.41

Explanation:

Using the constant growth model of dividend discount model, we can calculate the price of the stock today. The DDM values a stock based on the present value of the expected future dividends from the stock. The formula for price today under this model is,

P0 = D0 * (1+g) / (r - g)

Where,

D0 is the dividend paid  recentl

D0 * (1+g) is dividend expected for the next period /year

g is the growth rate

r is the required rate of return or cost of equity

First we need to calculate the required rate of return on this stock using CAPM.

Using the CAPM, we can calculate the required rate of return on a stock. This is the minimum return required by the investors to invest in a stock based on its systematic risk, the market's risk premium and the risk free rate.

The formula for required rate of return under CAPM is,

r = rRF + Beta * (rM - rRF)

Where,

rRF is the risk free rate

rpM is the market return

r = 0.025 + 2 * (0.07 - 0.025)

r = 0.115 or 11.5%

Using the constant growth of dividend formula,

P0 = 3.5 * (1+0.03)  /  (0.115 - 0.03)

P0 = $42.4117 rounded off to $41.41


Related Questions

Charles goes to Gamestop with only $50. They have the new Call of Duty for

$49.99 or a sale on controllers for $35. Since the controller was on sale, he

decides to buy it.

Answers

Answer:

Opportunity cost of call of duty = $14.99 (Negative effect)

Explanation:

Given:

Cost of call of duty = $49.99

Cost of controller = $35

Find:

Opportunity cost of call of duty

Computation:

Opportunity cost of call of duty = Cost of call of duty - Cost of controller

Opportunity cost of call of duty = $49.99 - $35

Opportunity cost of call of duty = $14.99 (Negative effect)

Assuming a 360 day year, the interest charged by the bank at the rate of 6%, on a 90 day discounted note payable of 100,000 is:_______.A. $6,000 B. $1,500 C. $ 500 D. $ 3,000

Answers

Answer:B. $1,500

Explanation:

Interest revenue is  money earned when an entity or individual  loans   money to another.  it can also be regarded as money accrued  from investments. IT is calculated as  

Interest Revenue = Principal x Rate x Time

= $100,000 x 6%  x 90/360

= $100,000 x 0.06 x 0.25

= $1,500

Therefore the interest charge by the bank is $1500.

Printers today have many features that include improved quality, photo printing capabilities, digital camera connectivity, built-in flash memory card readers, wireless connectivity, and faster speed. Suppose you are in the market for a new personal printer. Make a list of the most important features needed to meet your needs, and then research printers to identify the best printer for your needs. Be sure to consider both the price of the printer and the price of consumables (such as paper and ink/toner) in your evaluation process​

Answers

Answer:

A printer is a device that accepts text and graphic output from a computer and transfers the information to paper, usually to standard size sheets of paper. Printers vary in size, sophistication, speed, and cost. In general, more expensive printers are used for higher-resolution color printing.

Printers today have many features that include improved quality, photo printing capabilities, digital camera connectivity, built-in flash memory card readers, wireless connectivity, and faster speed.  

The Six important printer qualities are:

Color: It is important for users who need to print pages for presentations or maps, photos and other pages where color is part of the information. Color printers can also be set to print only in black-and-white. Color printers are more expensive to operate since they use two ink cartridges (one color and one black ink, toner) that need to be replaced after a certain number of pages. Users who don't have a specific need for color and who print a lot of pages will find a black-and-white printer cheaper to operate.  Resolution: Printer resolution (the sharpness of text and images on paper) is usually measured in dots per inch (dpi). Most inexpensive printers provide sufficient resolution for most purposes at 600 dpi. Speed: If you do much printing, the speed of the printer becomes important. Inexpensive printers print only about 3 to 6 sheets per minute. Color printing is slower. More expensive printers are much faster.Memory: Most printers come with a small amount of memory (for example, one megabyte) that can be expanded by the user. Having more than the minimum amount of memory is helpful and faster when printing out pages with large images or tables with lines around them (which the printer treats as a large image). Wireless connectivity : Specialized printer nowadays have wireless connectivity which allows user to communicate with the machine without physical operation. Like one can just give command to the printer to print their projects using their mobile phone while sitting on the couch. This feature might add extra bucks to the bill but its worth it. Printer languages The commands from the computer to the printer to tell the printer how to format the document being printed. These commands manage font size, graphics, compression of data sent to the printer, color, etc. The two most popular printer languages are Postscript and Printer Control Language.

Conclusively the best printer will be the one which will provide pleasant color contrast, good resolution, enough memory, wireless connectivity and have better language settings.

Bravo's complete assets and liabilities are Accounts Receivable $800, Equipment $10,000, Accounts Payable $4,200, Prepaid Rent $2,000, Supplies $400, Bank Loan $1,600, and Tools $300. Bravo's total assets are:_____.a. $11,100.b. $13,500.c. $11,500.d. $13,100.e. none of these.

Answers

Answer:

b $13,500

Explanation:

Assets are items that are used by a business organization for positive economic value .

Given that;

Accounts receivable = $800

Equipment = $10,000

Accounts payable = $4,200

Prepaid rent = $2,000

Supplies = $400

Bank loan = $1,600

Tools = $300

Total assets = Accounts receivable + Equipment + Prepaid rent + Supplies + Tools

Total assets = $800 + $10,000 + $2,000 + $400 + $300

Total assets = $13,500

Therefore, Bravo's total assets is $13,500.

Bond A sells at $975. Bond B sells at $1010. Both bonds have a coupon rate of 4%. All else equal, which bond has more interest rate risk?

Answers

Answer:

Bond A

Explanation:

Interest rate risk is the likelihood of loss to bondholders emanating from an increase in a bond's market interest rate which is also the yield to maturity.

However, a bond is issued at a premium when its market interest rate is lower than the coupon rate and at a discount when the reverse is the case.

In this instance, bond A was issued at a discount  while B was issued at a premium, hence, the market interest rate of Bond A is higher and it has a higher interest rate risk due to its yield to maturity which made it trade at a discount to the face value of $1000 per bond

A produce distributor uses 776 packing crates a month, which it purchases at a cost of $9 each. The manager has assigned an annual carrying cost of 36 percent of the purchase price per crate. Ordering costs are $31. Currently the manager orders once a month. How much could the firm save annually in ordering and carrying costs by using the EOQ? (Round intermediate calculations and final answer to 2 decimal places. Omit the "$" sign in your response.) Savings $_________ per year

Answers

Answer:

$261.42

Explanation:

economic order quantity (EOQ) = √(2SD/H)

S = cost per order = $31

D = annual demand = 776 x 12 = 9,312

H = holding cost = $9 x 36% = $3.24

EOQ = √[(2 x $31 x 9,312) / $3.24] = √178,192.59 = 422.13 ≈ 422

total ordering and holding costs considering EOQ:

ordering costs = (9,312 / 422) x $31 = $684.06

holding costs = $3.24 x (422/2) = $683.64

total = $1,367.70

current costs:

ordering costs = $31 x 12 = $372

holding costs = $3.24 x (776/2) = $1,257.12

total = $1,629.12

annual savings = $1,629.12 - $1,367.70 = $261.42

What would be the approximate expected price of a stock when dividends are expected to grow at a 25% rate in each of years 2 and 3, and then grow at a constant rate of 5% if the stock's required return is 13% and next year's dividend will be $4.00?

Answers

Answer:

$68.64

Explanation:

Div₁ = $4

Div₂ = $5

Div₃ = $6.25

Div₄ = $6.5625

the terminal value at year 3 = Div₄ / (Re - g) = $6.5625 / (13% - 5%) = $82.03

P₀ = $4/1.13 + $5/1.13² + ($6.25 + $82.03)/1.13³ = $88.28/1.13³ = $68.64

A company issues bonds with a $100,000 par value, an 8% annual contract rate, semiannual interest payments, and a five year life. The bonds sold for $107,850. The entry to record the issuance of the bonds will include

Answers

Answer:

a. A credit to Premium on Bond Payable $7,850

Multiple-choices

a. A credit to Premium on Bonds Payable of $7,850.

b. A debit to Discount on Bonds Payable of $7,850

c. A credit to Cash of $100.000.

d. A credit to Bonds Payable of $107850

Explanation:

Bonds issued at a premium mean a customer pays a higher price than the face value.  In this case, the premium amount is the difference between $107,850 and $100,000.  When bonds are issued at a premium,  the premium amount is debited to a premium bond account.  

(Cost of debt) Sincere Stationery Corporation needs to raise $500,000 to improve its manufacturing plant. It has decided to issue a $1,000 par value bond with a 14 percent annual coupon rate and a 10-year maturity. The investors require a 9 percent rate of return. a. Compute the market value of the bonds. b. What will the net price be if flotation costs are 10.5 percent of the market price?

Answers

Answer:

a. $1,320.88

b.  $1,182.19

Explanation:

The computation is shown below:

a. For market value of the bond

Given that

Rate = 9%

NPER = 10

PMT = $1,000 * 14% = $140

FV = $1,000

The formula is shown below:

= -PV(RATE;NPER;PMT;FV;TYPE)

After applying the above formula, the present value is $1,320.88 i.e. equivalent to the market value of the bonds

b. Now the net price be

= Market price × (1 - flotation cost)

= $1,320.88 × (1 - 0.105)

= $1,182.19

Romboski, LLC, has identified the following two mutually exclusive projects:Year Cash Flow (A) Cash Flow (B)0 58,000 58,000 1 34,000 21,200 2 28,000 25,200 3 20,000 30,000 4 13,600 25,200Requirement1:a) What is the IRR for each of these projects? (Do not round intermediate calculations. Enter your answer as a percentage roundedto 2 decimal places (e.g., 32.16).)(b) If you apply the IRR decision rule, which project should the company accept?Requirement 2:(a) Assume the required return is 14 percent. What is the NPV for each of these projects? (Do not round intermediate calculations.Round your answers to 2 decimal places (e.g., 32.16).)(b) Which project will you choose if you apply the NPV decision rule?Requirement 3:(a) Over what range of discount rates would you choose Project A? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)(b) Over what range of discount rates would you choose Project B? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)(c) At what discount rate would you be indifferent between these two projects? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Answers

Answer:

Year           Cash Flow (A)           Cash Flow (B)

0                    -58,000                   -58,000

1                      34,000                     21,200

2                     28,000                     25,200

3                     20,000                     30,000

4                      13,600                     25,200

Requirement 1:

a) What is the IRR for each of these projects?

using an excel spreadsheet and the IRR function:

Project A's IRR = 28.3%

Project B's IRR = 25.7%

(b) If you apply the IRR decision rule, which project should the company accept?

Project A (its IRR is higher)

Requirement 2:

(a) Assume the required return is 14 percent. What is the NPV for each of these projects?

using an excel spreadsheet and the NPV function:

Project A's NPV = $14,921.37

Project B's NPV = $15,156.64

(b) Which project will you choose if you apply the NPV decision rule?

Project B (its NPV is higher)

Requirement 3:

(a) Over what range of discount rates would you choose Project A?

higher than 14.85%

(b) Over what range of discount rates would you choose Project B?

lower than 14.85%

(c) At what discount rate would you be indifferent between these two projects?

crossover rate calculation

Year           Cash Flow (A)           Cash Flow (B)       differential amount

0                    -58,000                   -58,000                       $0

1                      34,000                     21,200                     $12,800

2                     28,000                     25,200                     $2,800

3                     20,000                     30,000                  -$10,000

4                      13,600                     25,200                   -$11,600

using an excel spreadsheet and IRR function, the cross over rate = 14.85%

Despite Alisa’s request for a 7% wage increase for workers with seniority, Katherine flat out rejects the request and cites the fact that the company has a salary freeze for all employees. In this situation, Katherine is using which type of power to make this decision?

Answers

Answer:

Legitimate power.

Explanation:

Legitimate power is one that a person hold as a result of their position in an organisation.

They formally hold a position if authority that enables them exercise such power.

For example in the community the police has the authority to arrest law offenders.

This type of authority tends to be on official matters that have a set guideline.

In the given scenario Katherine rejects Alisa’s request for a 7% wage increase for workers with seniority and cites the fact that the company has a salary freeze for all employees.

The freeze is an official guideline in place within the organisation, and Katherine is enforcing it.

The contrast between those with and those without Internet access is known as the __________ divide.

A. technology

B. global digital

C. interspace

D. None of the above

Answers

Answer: It is 100% B. Global digital

Explanation: The answer is on Quizlet.

The contrast between those with and without Internet access is known as the Global Digital divide. Thus option (B) is correct.

What is the Digital Divide?

The digital divide refers to the gap between demographics and regions that have access to modern information and communications technology and those that don't.

The digital divide encompasses the technical and financial ability to utilize available technology, along with access(or lack of access) to the internet. It exist between developed and developing, urban and rural populations.

The consequences of the digital divide include isolation, which can affect mental health, educational barriers as postsecondary education increasingly  moves online, and worsening gender discrimination, also affects the human and economic development of a nation.

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Knowledge Check 01 An unfavorable variance of $5,000 in cost of goods sold is determined by comparing the actual results (10,000 units) and the flexible budget (10,000 units). What type of variance is described?a. Activity variance b. Spending variance c. Revenue variance

Answers

Answer:

The correct option is b. Spending variance.

Explanation:

Spending variance can be described as the difference between the actual cost and budgeted cost at the actual activity level.

Since cost of goods sold (COGS) is the direct costs incurred to produce the goods that is sold by a firm, it therefore implies that the amount of variance in cost of goods sold can be determined by comparing the actual results and the flexible budget at the actual activity level or actual units.

Based on the explanation above, the correct option is b. Spending variance. That is, Spending variance is an unfavorable variance of $5,000 in cost of goods sold is determined by comparing the actual results (10,000 units) and the flexible budget (10,000 units).

Amy is single. During 2020, she determined her adjusted gross income was $12,000. During the year, Amy also contributed $2,500 to a Roth IRA. What is the maximum saver's credit she may claim for the year

Answers

Answer:

$1,000

Explanation:

Calculation for the maximum saver's credit she may claim for the year

For us to know the maximum saver's credit amount that she may claim for the year we have to know the standard maximum contribution amount that is eligibe for the maximum saver's credit which is the amount of $2,000 and then we multiply the amount by the standard filing status and AGI percentage which is 50%

Hence:

Maximum saver's credit=$2,000*50%

Maximum saver's credit=$1,000

Therefore the maximum saver's credit she may claim for the year will be $1,000

To some extent, Disney produces a product and a service. When it went to Japan, it represented an innovation to the Japanese market. The fact that it did well speaks to the ___________ of that innovation and the role that the Japanese partner played in addressing the specific cultural issues.

Answers

Answer: diffusion

Explanation:

Diffusion of innovation has to do with the spread of a particular innovation. We should note that the innovation was successful in Japan, and the Japanese accepted it.

The fact that it did well speaks to the diffusion of that innovation and the role that the Japanese partner played in addressing the specific cultural issues.

Omni Consumer Products (OCP) has equity with a market value of $900 million and debt with a value of $600 million. If OCP’s cost of equity is 18% and its weighted average cost of capital is 13%, what is OCP’s cost of debt? Assume no taxes.
a. 5.5%
b. 8.0%
c. 11.5%
d. 16.3%
e. 23.8%

Answers

Answer:

a. 5.5%

Explanation:

The computation of the cost of debt is shown below:

The Total market value is

= $900 + $600

= $1,500  

Now

WACC = Cost of equity ×  Equity market value ÷ Total market value + Cost of debt × Market value of debt ÷ Total market value

13% = 18% × $900 ÷ $1,500 + Cost of debt × $600 ÷ $1,500  

13% = 10.80% + Cost of debt × 0.4  

Cost of debt = (13% - 10.80%) ÷ 0.4

= 5.5%

Hence, the cost of debt is 5.5%

Therefore the correct option is a.

Having determined that June's poor work performance is related to a lack of ability, what is the first question you should ask?A) Why does June have a poor attitude?B) Does June lack commitment?C) Does June have the resources to do the job?D) Why doesn't June try harder?

Answers

I can help u I just did this); this is sooo easy):

Mitchell Co. has $1.1 million of debt, $3 million of preferred stock, and $3.3 million of common equity. What would be its weight on common equity

Answers

Answer:

0.45

Explanation:

Calculation for What would be its weight on common equity

Using this formula

Weight on common equity= Common equity/(Debt+Preferred stock+Common equity+ )

Let plug in the formula

Weight on common equity=$3.3 million /($1.1 million +$3 million +$3.3 million)

Weight on common equity=$3.3 million/$7.4 million

Weight on common equity=0.45

Therefore What would be its weight on common equity is 0.45

Question 7 of 20
Daniel works at an electronics store and a customer walks in. The customer
looks around but doesn't seem interested in any one thing. What
interpersonal skill should Daniel use to make a sale?
A. Flexibility
B. Proactivity
C. Aloofness
O D. Positivity

Answers

Answer:

proactivity

Explanation:

The interpersonal skill should Daniel use to make a sale is a Proactivity. Thus the correct option is B.

What is a Customer?

A customer is referred to as an individual who purchases a product or service. He may or may not be the consumer. A consumer refers to a person who utilizes or consume goods and service.

Interpersonal skills play a significant role in the process of communication which helps an individual to influence another individual or group of people with their unique skills.

In this case, it reflects that when a customer visits the electronic shop and does not find anything interesting the skills and proactiveness of the salesperson will be very useful here when he will communicate with the customer.

Here Salesperson will try to know the likeness of customers or to understand what he is looking for in the shop so that he can help customers with better service and satisfaction.

Therefore, option B is appropriate.

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Wood Company had the following inventory items on hand at the end of the year. Computing the lower of cost or net realizable value on an item-by-item basis, determine what amount would be reported on the balance sheet for inventory.

Quantity Cost per item Net realizable value per item Lower of cost or market Reported on the balance sheet
Item A 80 $87 $102
Item B 40 62 57
Total

Answers

Answer:

$9,240

Explanation:

Calculation for the amount that would be reported on the balance sheet for inventory

Using this formula

Quantity* Lower of cost or market= Amount to

be Reported on balance sheet

Let plug in the formula

Item A 80 *$87 =$6,960

Item B 40* 57=$2,280

Total $9,240

($6,960+$2,280)

Therefore the amount that would be reported on the balance sheet for inventory will be $9,240

Situational analysis:_______.a. reviews the organization’s internal operations. b. explores the organization’s external environment. c. analyzes the organization’s situation. d. all of these are correct.

Answers

Answer:

d. all of these are correct.

Explanation:

Situational analysis is used by companies to try and understand how their environment (both external and external) affects business environment, customers, and the come with us.

Basically it is used to understand the situation and environment a business operates in.

For example a company can familiarise themselves with the political environment of a country in order effectively operate there. Maybe a government that allows foreign direct investment provides a conducive environment for businesses to come in

If a one-year bond has a face value of $5,000 and is sold for $4,500, what is the interest rate on the bond?

Answers

Answer:

11.1%

Explanation:

The face value is $5000

It is sold for $4,500

Therefore the interest rate of this bond can be calculated as follows

$5000-$4500

= 500

500/4500 × 100

= 0.111 × 100

= 11.1%

Hence the interest rate is 11.1%

Company A provides corn to Company B to make into corn syrup. Company B sells its corn syrup to Company C, who makes ice cream for sale at Company D. Company D is a ___________ in the supply chain of ice cream.

A. tier 2 supplier

B. tier 1 supplier

C. retailer

D. manufacturer

Answers

Answer: C. retailer

Explanation:

Company D is a retailer because retailers are the ones that sell the final product and from the scenario depicted, the final product is ice cream and therefore it being sold by Company D makes them the retailer.

Tier 2 suppliers supply raw materials so that is company A. Tier 1 process raw materials so that is Company B and the manufacturer is evidently Company C which made the ice cream to be sold by D.

Suppose an increase in the demand for dollars has caused an appreciation of the dollar. According to the purchasing power parity theorem, the value of the dollar in the future will:

Answers

Answer:

Appreciate more

Explanation:

Suppose an increase in the demand for dollars has caused an appreciation of the dollar. According to the purchasing power parity theorem, the value of the dollar in the future will appreciate more. This is because the shift in demand and supply will cause an increase in the value of the dollar. Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.

Cash receipts for January are expected to total $174,000. Cash disbursements for January are expected to be $159,500. The company's minimum desired cash balance is $13,000. It started the period with $38,000. What is the expected cash balance at the end of January?

Answers

Answer:

idek

Explanation:

Do you think your career goals will be the same 5 years from now? 10 years from now? Why or why not?

Answers

Answer:

It maybe differ from your age, if you are in middle school now then maybe it may change later. But if you are already a graduate student then the main subject u r focusing in may be your career

The career goals of an individual are definitely subject to change during any given period like 5 years or 10 years. These changes in career goals may occur due to the change in his or her surroundings and other external factors.

What is the significance of career goals?

Career goals can be referred to or considered as such goals that an individual wishes to pursue in order to build his career and gain life and income opportunities. These career goals may be different for different individuals as per their choices.

In fact, the career goals may change for an individual as well over a span of any given period. The reasons for these changes may be unidentified in present. Some factors may be internal, such as change in desire; whereas the external factors include environmental and social changes.

Therefore, the significance regarding the change in career goals of an individual has been aforementioned.

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Favorable volume variances may be harmful when:
1) machine repairs cause work stoppages.
2) supervisors fail to maintain an even flow of work.
3) production in excess of normal capacity cannot be sold.
4) there are insufficient sales orders to keep the factory operating at normal capacity.

Answers

Answer: production in excess of normal capacity cannot be sold.

Explanation:

We say that there's a favorable volume variance in a situation whereby the production that's budgeted is less than the actual production.

Favorable volume variances may be harmful when production in excess of normal capacity cannot be sold. This is because since it can't be sold, this can bring about losses to the business.

The inverse market demand in a homogeneous product Cournot duopoly is P=100-2(Q1+Q2), and the costs are given by C(Q1) = 12Q1 and C(Q2) = 20Q2. The implied marginal costs are $12 for firm 1 and $20 for firm 2.

a. Determine the reaction function for firm 1.
b. Determine the reaction function for firm 2.
c. Calculate the Cournot equilibrium price and quantity.
d. Suppose firm 1 is a monopoly (firm 2 does not exist), what is firm 1's monopoly output and price?
e. How does the monopoly price and quantity comparing with Cournot equilibrium in part (c)?

Answers

Answer:

Following are the solution to the given points:

Explanation:

[tex]Q_1= 22-\frac{Q_2}{2}\\\\Q_2= 20-\frac{Q_1}{2}[/tex]

Replacing the [tex]Q_1[/tex] value in the equation mentioned above:

[tex]Q_2= 20- (\frac{(22-\frac{Q_2}{2})}{2})\\\\Q_2= 20-11+\frac{Q_2}{4}\\\\3\frac{Q_2}{4}=9\\\\Q_2= \frac{(9\times4)}{3}\\\\Q_2= 12[/tex]

Substituting the value of [tex]Q_2[/tex]:

[tex]Q_1= 22- \frac{Q_2}{2}\\\\Q_1= 22-6\\\\Q_1=16\\\\[/tex]

Now

[tex]P= 100-2(Q_1+Q_2)\\\\P= 100-2(16+12)\\\\P=100- 56\\\\P= 44\\\\[/tex]

In this firm a monopoly: (Q2 is 0 now)

Profit maximization is at MR=MC

as per the equation[tex]P= 100-2Q_1[/tex]

[tex]P.Q1= 100Q_1-2Q_1^{2}\\\\MR= 100-4Q_1\\\\MC= 12\\[/tex]

[tex]100-4Q_1=12\\\\4Q_1=88\\\\Q_1= 22\\\\and \ P= 100-2(22)= 56.[/tex]

If your nominal rate of return is 14.38 percent and your real rate of return is 4.97 percent, what is the inflation rate

Answers

Answer:

try 1.35

Explanation:

(Preferred stock valuation​) You are considering an investment in one of two preferred​ stocks, TCF Capital or TAYC Capital Trust. TCF Capital pays an annual dividend of $2.16​, while TAYC Capital pays an annual dividend of $1.94. If your required return is 11​percent, what value would you assign to the​ stocks?
The value of the TCF Capital preferred stock is $______ per share

Answers

Answer:

Price of TCF Capital = $19.6363 rounded off to $19.64

Price of TAYC Capital = $17.6363 rounded off to $17.64

Explanation:

The value of current price of a preferred stock can be calculated using the formula for perpetuity. A preferred stock qualifies as perpetuity because its dividend payments are of a constant amount, are paid after equal intervals of time and are for an indefinite time period. The formula for price of the stock is as follows,

P0 = Dividend / r

Where,

r is the required rate of return

Price of TCF Capital = 2.16 / 0.11

Price of TCF Capital = $19.6363 rounded off to $19.64

Price of TAYC Capital = 1.94 / 0.11

Price of TAYC Capital = $17.6363 rounded off to $17.64

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