Problem 14-02
What should be the prices of the following preferred stocks if comparable securities yield 7 percent? Use Appendix B and Appendix D to answer the questions. Round your answers to the nearest cent.
$
$
- MN, Inc., $8 preferred ($80 par)
- CH, Inc., $8 preferred ($80 par) with mandatory retirement after 14 years
Interest Factors for the Present Value of One Dollar Time Period (e.g. year) 1 2 3 4 5 NM 1% 990 980 971 961 .951 2% 980 1961 .942 .924 .906 3% .971 1943 915 .889 .863 4% 962 925 .889 .855 .822 5% 952 907 .864 .823 .784 6% 943 .890 .840 .792 .747 7% 8% 935 .926 .873 857 .816 .794 .763 .735 .713 .681 9% 917 .842 .772 .708 .650 10% .909 .826 .751 .683 .621 12% .893 .797 .712 .636 .567 14% 15% .877 870 .769 .756 .675 .658 .592 .572 .519 .497 16% .862 .743 .641 .552 476 18% .847 .718 .609 .516 437 20% .833 .694 .579 482 402 24% .806 .650 .524 .423 .341 28% .781 .610 -477 373 .291 6 7 8 9 10 942 933 .923 914 905 .888 .871 853 .837 .820 838 .813 -789 .766 .744 .790 .760 .731 .703 .676 .746 .705 .666 630 .711 .665.623 583 .677 627 582 .540 645 592 .544 .500 .614 .558 .508 463 .596 564 1547 513 .502 467 .460 .424 422 386 507 452 404 .361 .322 456 400 .351 .308 .270 432 .376 .327 .284 .247 410 370 354 314 305 .266 .263 .226 227 .191 335 .279 .233 .194 .162 .275 .222 .179 .144 .116 .227 .178 .139 .108 .085 11 12 13 14 15 896 .887 879 .870 .861 .804 788 -773 .758 .743 722 .701 .681 .661 .642 .650 .625 .601 .577 .555 .585 .557 .530 .505 481 .527 .497 .469 442 .417 .475 .444 415 388 362 429 388 .350 397 356 319 368 326 .290 .340 299 .263 315 -275 .239 .287 .257 .229 .205 .183 237 .208 .182 .160 .140 215 195 162.135 .094 .187 .168 137 112 076 .163 .145 116 .093 .061 .141 .125 .099 .078 .049 .123 108 084 .065 .040 .066 .052 .040 .032 .025 16 17 18 19 20 .853 728 .844 .714 .836 700 .828 .686 .820 .673 .623 .605 .587 .570 .554 .534 .513 .494 475 456 458 .394 436 .371 416 .350 396 331 377 312 .339 317 .296 .276 .258 .292 .270 .250 .232 .215 .252 .231 .212 .194 .178 .218 .198 .180 .164 .149 .163 .123 .107 093 .071 .054 .032 .019 .146 .108 .093 .080 060 .045 .026 .015 1130 095 081 069 .051.038 021 .012 .116 .083.070 060 .043 031 017 .009 .104 073 061 051 037 026 014 .007 25 .780 .610 478 .375 .295 .233 .184 .146 .116 .092 .059 .038 030 .024 .016 .010 .005 .002 30 .742 .552 .412 308 .231 .174 .131 .099 .075 .057 .033 020 .015 .012 .007 .004 .002 001 Interest Factors for the Present Value of an Annuity of One Dollar Time Period (e.g. year) 1 N 1% 2% 3% 5% 6% 7% 8% 9% 10% 12% 14% 16% 18% 20% 24% 28% 32% 36% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.862 0.847 0.833 0.806 0.781 0.758 0.735 1.970 1.942 1913 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.690 1.647 1.605 1.566 1.528 1.457 1.392 1.332 1.276 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.402 2.322 2.246 2.174 2.106 1.981 1.868 1.766 1674 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.037 2.914 2.798 2.690 2.589 2.404 2.241 2.096 1.966 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.274 3.127 2.991 2.745 2.532 2.345 2.181 3 4 5 6 5.795 5.601 5.417 5.242 5.076 4.917 4.766 4.623 4.486 4.355 4.111 3.889 3.685 3.498 3.326 3.020 2.759 2.534 2.399 7 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 4.039 3.812 3.605 3.242 2.937 2.678 2.455 8 7.652 7.325 7020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 4.344 4.078 3.837 3.421 3.076 2.786 2.540 9 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.985 5.759 5.328 4.946 4.607 4.303 4.031 3.566 3.184 2.868 2.603 10 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.650 5.216 4.833 4.494 4.193 3.682 3.269 2.930 2.650 11 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 5.988 5.453 5.029 4.656 4.327 3.776 3.335 2.978 2.683 12 11.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.194 5.660 5.197 4.793 4.439 3.851 3.387 3.013 2.708 13 12.134 11.348 10.635 9.986 9.394 8.534 8.358 7.904 7.487 7.103 6.424 5.842 5.342 4.910 4.533 3.912 3.427 3.040 2.727 14 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.628 6.002 5.468 5.008 4.611 3.962 3.459 3.061 2.740 15 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.060 7.606 6.811 6.142 5.575 5.092 4.675 4.001 3.483 3.076 2.750 16 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.312 7.824 6.974 6.265 5.669 5.162 4.730 4.003 3.503 3.088 2.758 17 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.002 7.120 6.373 5.749 5.222 4.775 4.059 3.518 3.097 2.763 18 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.2017.250 6.467 5.818 5.273 4.812 4.080 3.529 3.104 2.767 19 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.366 6.550 5.877 5.316 4.844 4.097 3.539 3.109 2.770 20 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.128 8.514 7.469 6.623 5.929 5.353 4.870 4.110 3.546 3.113 2.772 25 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.823 9.077 7.843 6.873 6.097 5.467 4.948 4.147 3.564 3.122 2.776 30 25.808 22.937 19.600 17.292 15.373 13.765 12.409 11.258 10.274 9.427 8.055 7.003 6.177 5.517 4.979 4.160 3.569 3.124 2.778
