Question
In: Finance
you have finally saved $5,000 and are ready to make your first investment. You have the...
you have finally saved $5,000 and are ready to make your first investment. You have the following alternatives for the investing that money:
Dan inc preferred stock paying a dividend of $3.50 and selling for $41 per share. Dan Electric Co common stock selling for $19. the stock recently paid a $3.09 dividend and the firm’s earnings per share have increased from $1.90( to the most recent dividend payment) in 5 years. The firm expects to grow at the same rate for the foreseeable future.
Your required rate of return for these investments is 10% for the preferred stock and 22% for the common stock. Using this information, answer these questions:
1- Calculate the value of each investment based on your required rate of return. (** hint: calculate the growth rate of earrings first)
2- which investment would you select? why?
Solutions
Expert Solution
SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE
jeff jeffy answered 11 months agoRelated Solutions
You have finally saved $10,000 and are ready to make your first investment. You have the...
You have finally saved $10,000 and are ready to make your first
investment. You have the three following alternatives for investing
that money:
A Microsoft bond with a par value of $1,000 that pays8.75
percent on its par value in interest, sells for $1,203.06, and
matures in 18 years.
Southwest Bancorp preferred stock paying a dividend of
$3.253.25 and selling for $22.69.
Emerson Electric common stock selling for $55.55, with a par
value of $5. The stock recently paid a...
You have finally saved $10,000 and are ready to make your first investment. You have the...
You have finally saved $10,000 and are ready to make your first
investment. You have the three following alternatives for investing
that money:
A Microsoft bond with a par value of $1000 that pays 8.75
percent on its par value in interest, sells for $1235.11, and
matures in 9 years.
Southwest Bancorp preferred stock paying a dividend of $2.59
and selling for $22.63.
Emerson Electric common stock selling for $56.03, with a par
value of $5. The stock recently paid...
You have finally saved $10,000 and are ready to make your first investment. You have the...
You have finally saved $10,000 and are ready to make
your first investment. You have the three following alternatives
for investing that money:
• A Microsoft bond with a par value of $1,000 that pays
9.50 percent on its par value in interest, sells for $1,283.61,
and matures in19 years.
• Southwest Bancorp preferred stock paying a dividend of
$3.23 and selling for $21.56.
• Emerson Electric common stock selling for $63.11,
with a par value of $5. The stock...
You have finally saved $10,000 and are ready to make your first investment. You have the...
You have finally saved $10,000 and are ready to make your first
investment. You have the three following alternatives for investing
that money: bullet • A Microsoft bond with a par value of $ 1
comma 000 1,000 that pays 9.25 9.25 percent on its par value in
interest, sells for $ 1 comma 218.53 1,218.53, and matures in 7 7
years. bullet • Southwest Bancorp preferred stock paying a dividend
of $ 2.11 2.11 and selling for $ 28.27...
You have finally saved $10,000 and are ready to make your first investment. You have the...
You have finally saved $10,000 and are ready to make your first
investment. You have the three following alternatives for investing
that money:
•A Microsoft bond with a par value of $1,000 that pays 8.75
percent on its par value in interest, sells for $1,251.99,
and matures in 17 years.
•Southwest Bancorp preferred stock paying a dividend of $3.36
and selling for $24.49.
•Emerson Electric common stock selling for $56.48, with a par
value of $5. The stock recently paid...
You have finally saved $10,000 and are ready to make your first investment. You have the...
You have finally saved $10,000 and are ready to make your first
investment. You have the three following alternatives for investing
that money:
• A Microsoft bond with a par value of $1000 that pays 9.75
percent on its par value in interest, sells for $1,213.93 , and
matures in 99 years.
• Southwest Bancorp preferred stock paying a dividend of $3.34
and selling for $28.92.
• Emerson Electric common stock selling for $63.46, with a par
value of $5....
You have finally saved $10,000 and are ready to make your first investment. You have the...
You have finally saved $10,000 and are ready to make your first
investment. You have the three following alternatives for investing
that money: A Microsoft bond with a par value of $1,000 that pays
8.00 percent on its par value in interest, sells for $1,150.62,
and matures in 18 years. Southwest Bancorp preferred stock paying a
dividend of $2.33 and selling for $29.71. Emerson Electric common
stock selling for $58.67, with a par value of $5. The stock
recently paid...
You have finally saved $10,000 and are ready to make your first investment. You have the...
You have finally saved $10,000 and are ready to make your first
investment. You have the three following alternatives for investing
that money: A Microsoft bond with a par value of $1,000 that pays
9.50 percent on its par value in interest, sells for $1,147.45,
and matures in 17 years. bullet Southwest Bancorp preferred stock
paying a dividend of $3.14 and selling for $24.61.
Emerson Electric common stock selling for $59.27, with a par
value of $5. The stock recently...
You have finally saved $10,000 and are ready to make your first investment. You have the...
You have finally saved $10,000 and are ready to make your first
investment. You have the three following alternatives for investing
that money:
Bank of America bonds with a par value of $1,000, that pays a
6.35 percent on its par value in interest, sells for $1,020, and
matures in 5 years.
Southwest Bancorp preferred stock paying a dividend of $2.63
and selling for $26.25.
Emerson Electric common stock selling for $52, with a par value
of $5. The stock...
you have finally saved $10,000 and are ready to make your first investment. You have the...
you have finally saved $10,000 and are ready to make your first
investment. You have the three following alternatives for investing
that money: Captial cities ABC, Inc. bonds with a par value of
$1,000, that pays and 8.75 percent on its par value in interest,
sells for $1,314, and marures in 12 years. southwest bancorp
preferred stock paying a dividend f $2.50 and selling for $25.50.
emerson electric common stock selling for $36.75, with a par value
of $5. The...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- The legal landscape is perpetually changing. Psychologists must remain abreast of these changes to avoid potentially...
- We are evaluating a project that costs $1.68 million, has a six-year life, and has no...
- In C++ Having call-by-reference allows one to use storeback parameters, i.e., parameters whose values are transmitted...
- You must evaluate a proposal to buy a new milling machine. The base price is $175,000,...
- “Triangle Guessing” game in Python The program accepts the lengths of three (3) sides of a...
- THIS PROGRAM HAS TO BE WRITTEN IN C Single function to perform the parity computation on...
- Consider a buffer system consisting of Benzoic acid (pKa = 4.20) and sodium benzoate, a) Would...
ADVERTISEMENT