Question

Barnes Air Conditioning Inc. has two classes of preferred stock: floating rate preferred stock and straight...

Barnes Air Conditioning Inc. has two classes of preferred stock: floating rate preferred stock and straight (normal) preferred stock. Both issues have a par value of $100. The floating-rate preferred stock pays an annual dividend yield of 6 percent, and the straight preferred stock pays 7 percent. Since the issuance of the two securities, interest rates have gone up by 1.00 percent for each issue. Both securities will pay their year-end dividend today.


a. What is the price of the floating-rate preferred stock most likely to be? (Do not round intermediate calculations and round your answer to 2 decimal places.)
  


b. What is the price of the straight preferred stock likely to be? (Do not round intermediate calculations and round your answer to 2 decimal places.)
  

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Barnes Air Conditioning Inc. has two classes of preferred stock: floating rate preferred stock and straight...
Barnes Air Conditioning Inc. has two classes of preferred stock: floating rate preferred stock and straight (normal) preferred stock. Both issues have a par value of $100. The floating-rate preferred stock pays an annual dividend yield of 5 percent, and the straight preferred stock pays 6 percent. Since the issuance of the two securities, interest rates have gone up by 1.00 percent for each issue. Both securities will pay their year-end dividend today. a. What is the price of the...
Barnes Air Conditioning Inc. has two classes of preferred stock: floating rate preferred stock and straight...
Barnes Air Conditioning Inc. has two classes of preferred stock: floating rate preferred stock and straight (normal) preferred stock. Both issues have a par value of $100. The floating rate preferred stock pays an annual dividend yield of 4 percent, and the straight preferred stock pays 5 percent. Since the issuance of the two securities, interest rates have gone up by 2.50 percent for each issue. Both securities will pay their year-end dividend today. What is the price of the...
Arondale Aeronautics has perpetual preferred stock outstanding with a par value of $100. The stock pays...
Arondale Aeronautics has perpetual preferred stock outstanding with a par value of $100. The stock pays a quarterly dividend of $3.00, and its current price is $88. What is its nominal annual rate of return? Do not round intermediate calculations. Round your answer to two decimal places. What is its effective annual rate of return? Do not round intermediate calculations. Round your answer to two decimal places.
North Pole Cruise Lines issued preferred stock many years ago. It carries a fixed dividend of...
North Pole Cruise Lines issued preferred stock many years ago. It carries a fixed dividend of $9 per share. With the passage of time, yields have soared from the original 10 percent to 7 percent (yield is the same as required rate of return). a. What was the original issue price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the current value of this preferred stock? (Do not round intermediate calculations. Round your...
Smiling Elephant, Inc., has an issue of preferred stock outstanding that pays a $5.00 dividend every...
Smiling Elephant, Inc., has an issue of preferred stock outstanding that pays a $5.00 dividend every year, in perpetuity. If this issue currently sells for $80.10 per share, what is the required return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Required return             %
X-Tech Company issued preferred stock many years ago. It carries a fixed dividend of $6 per...
X-Tech Company issued preferred stock many years ago. It carries a fixed dividend of $6 per share. With the passage of time, yields have soared from the original 8 percent to 13 percent (yield is the same as required rate of return). a. What was the original issue price? (Do not round intermediate calculations. Round your answer to 2 decimal places.)    b. What is the current value of this preferred stock? (Do not round intermediate calculations. Round your answer...
Here are forecasts for next year for two stocks: Stock A Stock B Return on equity...
Here are forecasts for next year for two stocks: Stock A Stock B Return on equity 15 % 14 % Earnings per share $ 2.00 $ 1.50 Dividends per share $ 1.00 $ 1.00 a. What are the dividend payout ratios for each firm? (Do not round intermediate calculations. Enter your answers as a percent rounded to the nearest whole number.) b. What are the expected dividend growth rates for each stock? Assume dividend has a steady growth for both...
HBM, Inc has the following capital structure: Assets $ 600,000 Debt $ 270,000 Preferred stock 90,000...
HBM, Inc has the following capital structure: Assets $ 600,000 Debt $ 270,000 Preferred stock 90,000 Common stock 240,000 The common stock is currently selling for $17 a share, pays a cash dividend of $0.95 per share, and is growing annually at 8 percent. The preferred stock pays a $8 cash dividend and currently sells for $86 a share. The debt pays interest of 6.5 percent annually, and the firm is in the 30 percent marginal tax bracket. What is...
HBM, Inc has the following capital structure: Assets $ 600,000 Debt $ 240,000 Preferred stock 60,000...
HBM, Inc has the following capital structure: Assets $ 600,000 Debt $ 240,000 Preferred stock 60,000 Common stock 300,000 The common stock is currently selling for $12 a share, pays a cash dividend of $0.55 per share, and is growing annually at 4 percent. The preferred stock pays a $9 cash dividend and currently sells for $96 a share. The debt pays interest of 8.5 percent annually, and the firm is in the 30 percent marginal tax bracket. What is...
X-Tech Company issued preferred stock many years ago. It carries a fixed dividend of $8 per...
X-Tech Company issued preferred stock many years ago. It carries a fixed dividend of $8 per share. With the passage of time, yields have soared from the original 15 percent to 18 percent (yield is the same as required rate of return). a. What was the original issue price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Original issue price              b. What is the current value of this preferred stock? (Do not round...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT