Author Question: Wernam Hogg Class A preferred shares have a par value of $100 and offer an annual dividend at 0.8% ... (Read 62 times)

storky111 · **on:** Apr 25, 2021

Question 1

Versalife Inc. just paid a dividend of $1.32 on its common stock, and the next dividend will be paid one year from now. You require a return of 6%. What is the market price of this stock if there is no growth in annual dividends?
◦ $1.26
◦ $12.00
◦ $20.68
◦ $22.00

Question 2

Wernam Hogg Class A preferred shares have a par value of $100 and offer an annual dividend at 0.8% of par value. Wernam Hogg is experiencing cash flow problems due to poor market conditions in the commercial paper business. The company has suspended dividends on the Class A preferred shares. Analysts do not expect the dividends to resume for another 3 years, at which point they are expected to resume in perpetuity. If investors require a return of 2.25%, then what is the fair price for the preferred shares today?
◦ $34.01
◦ $34.77
◦ $35.56
◦ $96.65
◦ $340.08

Mholman93 · **Reply #1 on:** Apr 25, 2021

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