Author Question: LTM, Inc. has an issue of preferred stock whose par value is 1,000. The preferred stock pays a 4.5 ... (Read 92 times)

cookcarl · **on:** Jul 10, 2018

LTM, Inc. has an issue of preferred stock whose par value is 1,000. The preferred stock pays a 4.5
dividend. If investors require a 5.5 rate of return for these shares, what price should the preferred
stock sell for?

A) 611.11 B) 508.33 C) 818.18 D) 409.09

Question 2

Based on analysis of the company and expected industry and economic conditions, China Imports is expected to earn 4.60 per share of common stock next year. The average price/earnings ratio for firms in the same industry is 8.

Calculate the estimated value of a share of China Imports common stock.

meryzewe · **Reply #1 on:** Jul 10, 2018

Answer to Question 1

C

Answer to Question 2

Estimated value of share price = 4.60 8 = 36.80 per share

Author Question: LTM, Inc. has an issue of preferred stock whose par value is 1,000. The preferred stock pays a 4.5 ... (Read 92 times)

cookcarl

LTM, Inc. has an issue of preferred stock whose par value is 1,000. The preferred stock pays a 4.5 ...

meryzewe

LTM, Inc. has an issue of preferred stock whose par value is 1,000. The preferred stock pays a 4.5 ...

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