Finance

Hooks Athletics, Inc., has outstanding a preferred stock with a par value of $30 that pays a dividend of $2.50. The preferred stock is redeemable at the option of the stockholder in 10 years at a price equal to $30. The stock may be called for redemption by the company in 15 years at the price of $32.50. (Any stock that is not redeemed at the end of 10 years can be expected to be called by the comany in 15 years). If you know that investors require a 15 percent pretax rate of return on this preferred stock, what is the current market value of this preferred stock?

  1. 👍
  2. 👎
  3. 👁
  1. 18.92

    1. 👍
    2. 👎

Respond to this Question

First Name

Your Response

Similar Questions

  1. Accounting

    Samuels, Inc. reported net income for 2011 is $105,000. During 2011 the company had 5,000 shares of $100 par, 5% preferred stock and 20,000 of $5 par common stock outstanding. Samuels’ earnings per share for 2011 is A.$4.00

  2. Accounting ll

    The board of directors announces a 2-for-1 stock split on 20,000 outstanding shares of $15.00 par common stock. Immediately after the stock split, the A. outstanding shares increase to 40,000. B. outstanding shares decrease to

  3. accounting

    Internal Insights Inc., a developer of radiology equipment, has stock outstanding as follows: 70,000 shares of cumulative preferred 2% stock, $60 par, and 100,000 shares of $10 par common. During its first four years of

  4. bond valuation

    Bond valuation The Garraty Company has two bond issues outstanding. Both bonds pay $100 annual interest plus $1,000 at maturity. Bondf L has a maturity of 15 years, and Bond S a maturity of 1 year. a. What will the value of each

  1. accounts

    Ex 11.5 The year-end balance sheet of Jackson Products, INC., includes the following stockholders' equity section (with certain details ommited): Stockholders' equity: Capital stock: 7% cumulative preferred stock, $100 par

  2. business math- check my answers please

    A share of perpetual preferred stock pays an annual dividend of $6 per share. If the investors require a 12% rate of return, what should be the price of this preferred stock? a. $57.25, b. $50.00, c. $62.38, $46.75, e. $41.64. I

  3. corporate finance

    National Health Corporation (NHC) has a cumulative preferred stock issue outstanding, which has a stated annual dividend of $9 per share. The company has been losing money and has not paid preferred dividends for the last five

  4. accounting

    Jones Company is authorized to issue 20,000 shares of no-par, $5 stated-value common stock and 5,000 shares of 9%, 100 par preferred stock. It enters into the following transaction: 1. Accepts a subscription contract to 7,000

  1. Advanced Algebra

    HELP! WHICH IS THE HIGHEST RISK INVESTMENT? List the following stocks and bonds in order from highest default risk to lowest default risk: A municipal bond in a city with a population of 150,000 A common stock in a company under

  2. Accounting

    A company had stock outstanding as follows during each of its first three years of operations: 2,500 shares of $10, $100 par, cumulative preferred stock and 50,000 shares of $10 par common stock. The amounts distributed as

  3. business

    Wallace Inc., a developer of radiology equipment, has stock outstanding as follows: 30,000 shares of cumulative preferred 2% stock, $90 par and 125,000 shares of $10 par common. During its first four years of operations, the

  4. ACC291

    The following stockholders' equity accounts arranged alphabetically are in the ledger of McGrath Corporation at December 31, 2011. Common Stock ($10 stated value) $1,500,000 Paid-in Capital from Treasury Stock 6,000 Paid-in

You can view more similar questions or ask a new question.