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What is the value of a preferred stock that pays a perpetual dividend of 75 at the end of each year when the interest rate is 4 percent?
Wiki User
∙ 10y ago
The formula for this problem is as follows:
PV(perpetuity)=CF/i
With the application of the numbers from this problem, you would plug them in as follows:
75/.04 = $1875 < your answer.
Hope that helps
Wiki User
∙ 10y ago
Anonymous
1875
Add your answer:
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Does the 70 percent dividend exclusion include preferred stock?
70 percent dividend income exclusion on the tax returns of corporations. That is, if a corporation owns preferred stock, it can exclude 70 percent of dividend income and pay income taxes on only 30 percent of dividend income, both preferred and common stock.
Gary Wells Inc plans to issue perpetual preferred stock with an annual dividend of 6.50 per share If the required return on this preferred stock is 6.5 percent at what price should the stock sell?
To answer this question, the appropriate formula is the discounted dividend model without growth which is presented as follows: P = DIV / r where P = price of the stock DIV = the amount of the annual dividend r = the required rate of return Using the above formula: V = $6.50 / 6.5% = $6.50 / 0.065 = $100 The price of the stock would be approximately $100 using the discounted dividend model.
What is the firm's cost of preferred stock if a preferred stock pays an annual dividend of 8.50 a share and sells for 40 a share and the tax rate is 35 percent?
8.5/40=21.25%
How musch is an interest on a 2.5 billion dollar loan?
It depend on the interest of the loan some have a 0 percent interest all the way up to a 0.3 percent interest!
The what percent is found by dividing the annual per share dividend by the closing price per share?
Yield
Does the 70 percent dividend exclusion include preferred stock?
70 percent dividend income exclusion on the tax returns of corporations. That is, if a corporation owns preferred stock, it can exclude 70 percent of dividend income and pay income taxes on only 30 percent of dividend income, both preferred and common stock.
A corporation with a marginal tax rate of 34 percent would receive what after-tax dividend yield on a 12 percent coupon rate preferred stock bought at par assuming a 70 percent dividend exclusion?
A corporation with a marginal tax rate of 34 percent would receive what after-tax dividend yield on a 12 percent coupon rate preferred stock bought at par assuming a 70 percent dividend exclusion?
Ezzell Corporation issued perpetual preferred stock with a 10 percent annual dividend the stock currently yields 8 percent and its par value is 100 dollars what is the stocks value?
Without knowing the age of the stock, it is not possible to assess the value of Ezzell Corporation preferred stock. The par value is $100. If the annual dividend is reinvested the value of holdings would have an 8% increase annually, amalgamated plus an increase for any change in value.
Gary Wells Inc plans to issue perpetual preferred stock with an annual dividend of 6.50 per share If the required return on this preferred stock is 6.5 percent at what price should the stock sell?
To answer this question, the appropriate formula is the discounted dividend model without growth which is presented as follows: P = DIV / r where P = price of the stock DIV = the amount of the annual dividend r = the required rate of return Using the above formula: V = $6.50 / 6.5% = $6.50 / 0.065 = $100 The price of the stock would be approximately $100 using the discounted dividend model.
What is the firm's cost of preferred stock if a preferred stock pays an annual dividend of 8.50 a share and sells for 40 a share and the tax rate is 35 percent?
8.5/40=21.25%
Invested 53200 cash in the common stock of XYZ a 4 percent interest. Received the quarterly dividend of 1450 from the investment in XYZ. Journalize dividend transaction?
[Debit] Cash 1450 [Credit] dividend income 1450
What's the dividend yield capital gains yield and the expected rate return of the stock with preferred stock at eight dollar annual dividend to be paid in perpetuity a discount rate is twelve percent?
* 1 Preferred share dividend yield * 2 Common share dividend yield * 3 History * 4 Related Reference * 5 Dow Industrials * 6 S&P 500 * 7 See also * 7.1 Lists * 8 External links Dividend payments on preferred shares are stipulated by the prospectus. The company will typically refer to a preferred share by its initial name which is the yield on its original price --- for example, a 6% preferred share. However, the price of preferred shares varies according to the market so the yield based on the current price fluctuates. Owners of preferred shares calculate multiple yields to reflect the different possible outcomes over the life of the security. * current yield is the $Dividend / Pfd share current price. * Since the share may be purchased at a lower (higher) cost than its final redemption value, holding it to maturity will result in a capital gain (loss). The annualized rate of gain is calculated using the Present value of a dollar calculation. ('PV' is the current stock price. 'FV' is the redemption value. 'n' is the number of years to redemption. Solve for the interest rate 'r'.) The yield to maturity is the sum of this annualized gain (loss) and the current yield. * There are other possible yields discussed at Yield to maturity. Unlike preferred stock, there is no stipulated dividend for common stock. Instead, dividends paid to holders of common stock are set by management, usually in relation to the company's earnings. There is no guarantee that future dividends will match past dividends or even be paid at all. Due to the difficulty in accurately forecasting future dividends, the most commonly-cited figure for dividend yield is the current yield which is calculated using the following formula: For example, take a company which paid dividends totaling $1 last year and whose shares currently sell for $20. Its dividend yield would be calculated as follows: Rather than use last year's dividend, some try to estimate what the next year's dividend will be and use this as the basis of a future dividend yield. Such a scheme is used for the calculation of the FTSE UK Dividend+ Index[1]. It should be noted that estimates of future dividend yields are by definition uncertain.
How many percent dividend is pay reliance power?
20 %
What is the correct.... How much percent or how many percent?
The preferred wording would be, "what percent".
What percent of children preferred Kick Cereal if 19 preferred it and 25 did not?
76%
What is Dividend Yield?
The dividend yield is the ratio of the annual dividend amount to the current price of the stock. So if the dividend is $1 and the current price is $50, the yield is 2 percent ($1/$50). But when the stock changes price the current dividend changes accordingly.
What is the plural of percent?
The plural of the noun percent is percent or percents. Both are acceptable, though percent is preferred.
