TXS Manufacturing has an outstanding preferred stock issue with a par value of $65 per share. The

Question:

TXS Manufacturing has an outstanding preferred stock issue with a of $65 per share. The preferred shares pay dividends annually at a rate of 10%.
a. What is the annual on TXS preferred stock?
b. If investors require a return of 8% on this stock and the next is payable
1 year from now, what is the price of TXS preferred stock?
c. Suppose that TXS has not paid dividends on its preferred shares in the last
2 years, but investors believe that it will start paying dividends again in 1 year.
What is the value of TXS preferred stock if it is cumulative and if investors require an 8% rate of return?
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...