Asked by Chris
You have finally saved 10,000 and are ready to make your first investment. You have the three following alternatives for investing that money:
1) Captial cities ABC Inc. bonds with a par value of $1000 that pays an 8.75 percent on its par value in interest, sells for $1.34 and matures in 12 years.
2) Southwest Bancorp preferred stock paying a dividend of $2.50 and selling for $25.50.
3) Emerson Electric common stock selling for $36.75 with a par value of $5. The stock recently paid a $1.32 dividend and the firms earning per share has increased from $1.49 to $3.06 in the past five years. The firm expects to grow at the same rate for the foreseeable future.
Your required rate of return for these investments are 6 percent for the bond, 7 % for the preferred stock, and 15% for the common stock. Using this information answer the folling question.
Calculate the value of each investment based on your required rate of return.
1) Captial cities ABC Inc. bonds with a par value of $1000 that pays an 8.75 percent on its par value in interest, sells for $1.34 and matures in 12 years.
2) Southwest Bancorp preferred stock paying a dividend of $2.50 and selling for $25.50.
3) Emerson Electric common stock selling for $36.75 with a par value of $5. The stock recently paid a $1.32 dividend and the firms earning per share has increased from $1.49 to $3.06 in the past five years. The firm expects to grow at the same rate for the foreseeable future.
Your required rate of return for these investments are 6 percent for the bond, 7 % for the preferred stock, and 15% for the common stock. Using this information answer the folling question.
Calculate the value of each investment based on your required rate of return.
Answers
Answered by
Deirdre
$1134.14
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