Problem 14-03 What should be the prices of the following preferred stocks if comparable securities yield 2 percent? Use Appendix B and Appendix D to answer the questions. Round your answers to the nearest cent. value of preferred stock: fall / rise MN, Inc., $11 preferred ($100 par) $ 550 CH, Inc., $11 preferred ($100 par) with mandatory retirement after 6 years both prferred stocks: declined / increased $ 150.41 What should be the prices of the following preferred stocks if comparable securities yield 8 percent? Round your answers to the nearest cent. MN, Inc., $11 preferred ($100 par) price of the: $ perpetual preferred stock/ stock with mandatory retirement CH, Inc., $11 preferred ($100 par) with mandatory retirement after 6 years $ In which case did the price of the stock change? As with the valuation of bonds, an increase in interest rates causes the value of preferred stock to -Select- In which case was the price more volatile? While the prices of both preferred stocks -Select- the price of the -Select- was more volatile. Interest Factors for the Present Value of an Annuity of One Dollar 2% 6% 9% Time Period (e.g. year) 1 2 3 4 5 1% 3% 4% 5% 7% 8% 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 1.913 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 6 7 8 9 10 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 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 7.652 7.325 7.020 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 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 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 17 18 19 20 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 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 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 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 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 Interest Factors for the Present Value of One Dollar 2% Time Period (e.g., year) 1 2 3 4 5 Nm 1% 3% .990 980 .971 980 1961 .943 971 .942 .915 961 924 .889 951 .906 863 4% 1962 .925 .889 .855 .822 5% 952 .907 .864 .823 .784 6% 7% 8% 9% .943 .935 .926 917 .890 .873 .857 .842 .840.816 .794 .772 .792 .763 .735 .708 .747 .713 681 650 10% 909 .826 .751 .683 .621 12% 14% .893 .877 .797 .769 .712 .675 .636 592 .567 .519 15% .870 .756 .658 .572 497 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 10 942 888 838 933 871 813 923 853 789 914 837 .766 905 820 .744 .790 .760 .731 .703 .676 .746 .711 .677 .645 .614 .705 .666 630 596 .665.623 583 547 .627 582 540 502 .592 .544 500 460 .558 .508 463 422 .564 .513 467 424 386 .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 .397 .368 .340 .315 388 356 326 .299 .275 .350 .319 .290 .263 .239 .287 .257 .229 .205 .183 .237 .208 .182 .160 .140 .215 .187 .163 .141 .123 .195 162 .168 .137 .145 .116 .125 .099 .108 .084 .135 .112 .093 078 .065 .094 .076 .061 .049 .040 .066 052 .040 .032 .025 16 17 18 19 20 .853 .844 .836 .828 .820 .728 .714 .700 .686 .673 .623 .605 .587 .570 .554 .534 .513 494 475 456 458 436 416 396 .377 .394 339 .371 .317 350 .296 331 -276 312 .258 .292 .270 .250 .232 .215 .252 .231 .212 .194 .178 .218 .198 .180 .164 .149 .163 .146 .130 .116 .104 .123 .108 .095 .083 .073 .107 .093 .081 .070 .061 .093 071 .054 .032 .080 .060 .045 .026 .069 .051.038 021 .060 .043 .031 .017 .051 .037 .026 .014 .019 .015 .012 .009 .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 Problem 14-03 What should be the prices of the following preferred stocks if comparable securities yield 2 percent? Use Appendix B and Appendix D to answer the questions. Round your answers to the nearest cent. value of preferred stock: fall / rise MN, Inc., $11 preferred ($100 par) $ 550 CH, Inc., $11 preferred ($100 par) with mandatory retirement after 6 years both prferred stocks: declined / increased $ 150.41 What should be the prices of the following preferred stocks if comparable securities yield 8 percent? Round your answers to the nearest cent. MN, Inc., $11 preferred ($100 par) price of the: $ perpetual preferred stock/ stock with mandatory retirement CH, Inc., $11 preferred ($100 par) with mandatory retirement after 6 years $ In which case did the price of the stock change? As with the valuation of bonds, an increase in interest rates causes the value of preferred stock to -Select- In which case was the price more volatile? While the prices of both preferred stocks -Select- the price of the -Select- was more volatile. Interest Factors for the Present Value of an Annuity of One Dollar 2% 6% 9% Time Period (e.g. year) 1 2 3 4 5 1% 3% 4% 5% 7% 8% 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 1.913 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 6 7 8 9 10 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 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 7.652 7.325 7.020 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 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 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 17 18 19 20 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 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 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 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 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 Interest Factors for the Present Value of One Dollar 2% Time Period (e.g., year) 1 2 3 4 5 Nm 1% 3% .990 980 .971 980 1961 .943 971 .942 .915 961 924 .889 951 .906 863 4% 1962 .925 .889 .855 .822 5% 952 .907 .864 .823 .784 6% 7% 8% 9% .943 .935 .926 917 .890 .873 .857 .842 .840.816 .794 .772 .792 .763 .735 .708 .747 .713 681 650 10% 909 .826 .751 .683 .621 12% 14% .893 .877 .797 .769 .712 .675 .636 592 .567 .519 15% .870 .756 .658 .572 497 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 10 942 888 838 933 871 813 923 853 789 914 837 .766 905 820 .744 .790 .760 .731 .703 .676 .746 .711 .677 .645 .614 .705 .666 630 596 .665.623 583 547 .627 582 540 502 .592 .544 500 460 .558 .508 463 422 .564 .513 467 424 386 .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 .397 .368 .340 .315 388 356 326 .299 .275 .350 .319 .290 .263 .239 .287 .257 .229 .205 .183 .237 .208 .182 .160 .140 .215 .187 .163 .141 .123 .195 162 .168 .137 .145 .116 .125 .099 .108 .084 .135 .112 .093 078 .065 .094 .076 .061 .049 .040 .066 052 .040 .032 .025 16 17 18 19 20 .853 .844 .836 .828 .820 .728 .714 .700 .686 .673 .623 .605 .587 .570 .554 .534 .513 494 475 456 458 436 416 396 .377 .394 339 .371 .317 350 .296 331 -276 312 .258 .292 .270 .250 .232 .215 .252 .231 .212 .194 .178 .218 .198 .180 .164 .149 .163 .146 .130 .116 .104 .123 .108 .095 .083 .073 .107 .093 .081 .070 .061 .093 071 .054 .032 .080 .060 .045 .026 .069 .051.038 021 .060 .043 .031 .017 .051 .037 .026 .014 .019 .015 .012 .009 .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