Finance Homework 4

Preferred dividends Acura Labs Inc. has an outstanding issue of preferred stock with a par value of $100 and an 18% annual dividend. a. What is the annual dollar dividend? If it is paid quarterly, how much will be paid each quarter? [1. If the preferred stock is noncumulative and the board of directors has passed the preferred dividend for the last 2 quarters, how much must be paid to preferred stockholders in the current quarter before dividends are paid to common stockholders? c. If the preferred stock is cumulative and the board of directors has passed the preferred dividend for the last 2 quarters, how much must be paid to preferred stockholders in the current quarter before dividends are paid to common stockholders? a. The annual dollar dividend is $ . (Round to the nearest oent.) P7-7 (similar to) 55 Question Help a Preferred stock valuation Jones Design wishes to estimate the value of its outstanding preferred stock. The preferred issue has a par value of $80 and pays an annual dividend of $5.80 per share. Similar-risk preferred stocks are currently earning an annual rate of return of 81%. a. What is the market value of the outstanding preferred stock? I). If an investor purchases the preferred stock at the value calculated in part a, how much does she gain or lose per share if she sells the stock when the required return on similar-risk preferred stocks has risen to 10.3%? a. The market value of the outstanding preferred stock is $ per share. (Round to the nearest cent.) Common stock valueConstant growth McCraoken Roong, Inc., common stock paid a dividend of $1.28 per share last year. The company expects earnings and dividends to grow at a rate of 5% per year for the foreseeable future. a. What required rate of return for this stock would result in a price per share of $24? b. If McCracken expects both earnings and dividends to grow at an annual rate of 11%, what required rate of return would result in a price per share of $24? a. The required rate of return for this stock, in order to result in a price per share of $24, is %. (Round to two decimal places.) Common stock value-Variable growth Lawrence Industries' most recent annual dividend was $1.45 per share (Do = $1.45), and the firm's required return is 14%. Find the market value of Lawrence's shares when dividends are expected to grow at 8% annually for 3 years, followed by a 5% constant annual growth rate in years 4 to infinity. The market value of Lawrence's shares is $ . (Round to the nearest cent.)Valuation with price/earnings multiples For the rm shown in the following table, use the data given to estimate its common stock value employing price/earnings (PIE) multiples. (Click on the icon here Q in order to copy the contents of the data table below into a spreadsheet.) Expected EPS Price/earnings multiple $3.51 15.3 The value of the rm's common stock is $ . (Round to the nearest cent.) P3-26 (similar to) DuPont system of analysis Use the following 2016 financial information for ATT and Verizon to conduct a DuPont system of analysis for each company. ATT Verizon Sales $163,800 $126,280 Earnings available for common stockholders 13,233 13,608 Total assets 404,021 244,280 Stockholders' equity 124, 110 24,032 a. Which company has the higher net profit margin? Higher asset turnover? b. Which company has the higher ROA? The higher ROE? a. Net profit margin (Round to three decimal places.) ATT Verizon Net profit margin