## [answered] A preference share pays annual dividend of \$5 per share in

1. A preference share pays annual dividend of \$5 per share in a year. If the effective annual interest rate is 8%, calculate the share price today in the following cases: (1) Dividends will be paid at the end of a year and the expected selling price of this share is \$80 in one year.

Select one:

a. \$62.50

b. \$78.70

c. \$77.50

d. \$76.39

2. A preference share pays annual dividend of \$5 per share in a year. If the effective annual interest rate is 8%, calculate the share price today in the following cases:

Dividends will be paid at the end of each year for two years and the expected selling price of this share is \$80 in two years.

Select one:

a. \$62.50

b. \$78.70

c. \$77.50

d. \$76.39

3. A preference share pays annual dividend of \$5 per share in a year. If the effective annual interest rate is 8%, calculate the share price today in the following cases:

Dividends will be paid at the end of each year for three years and the expected selling price of this share is \$80 in three years.

Select one:

a. \$78.70

b. \$62.50

c. \$76.39

d. \$77.50

4. A preference share pays annual dividend of \$5 per share in a year. If the effective annual interest rate is 8%, calculate the share price today in the following cases:

Dividends will be paid at the end of each year that will continue indefinitely.

Select one:

a. \$78.70

b. \$77.50

c. \$62.50

d. \$76.39

5. A preference share pays annual dividend of \$5 per share in a year. If the effective annual interest rate is 8%, calculate the share price today in the following cases:

Dividends will be paid at the end of each year that will continue indefinitely and dividends are expected to grow at 3% per annum.

Select one:

a. \$125.00

b. \$100.00

c. \$78.70

d. \$77.50

(6) A preference share pays annual dividend of \$5 per share in a year. If the effective annual interest rate is 8%, calculate the share price today in the following cases:

Dividends will be paid at the end of each year that will continue indefinitely and dividends are expected to grow at constant percent per annum. Dividend payout ratio is 60% and an expected return on equity is 10%.

Select one:

a. \$78.70

b. \$100.00

c. \$125.00

d. \$77.50

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This question was answered on: Sep 18, 2020

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