Hello! i have a couple of questions i am stumped on! please help! Mark Davis own

Question

Hello! i have a couple of questions i am stumped on! please help!

Mark Davis owns a warehouse with a fair market value of $825,000. His insurance policy has an 80% coinsurance clause and a face value of $550,000. A fire causes damage in the amount of $185,000. How much will the insurance policy pay?

The ABC Corporation was incorporated with 100,000 of cumulative preferred stock shares and 500,000 shares of common stock. The preferred stock pays a dividend of $2.25 per year. Due to business conditions, the firm did not pay dividends in 2013. In 2014, the company announces it will pay $500,000 in dividends.
1. How much will be paid to BOTH the preferred and common shareholders?  

Use the following information for Questions 2 through 5. A bond currently has the following stock quote: Duke/Progress 7½ 19   111
2. How much would it cost to purchase this bond?
3. How much interest would this bond pay each year?   
4. What is its current yield?   
5. When does the bond mature?  

Explanation / Answer

1)Amount paid by insurance company =Damage *% of coverage

                                      = 185000 *.20

                                       = 37000

**80% is covered under coinsurance .

2)aMount paid to prefered stockholders= 2.25 *100000 *2 years = 450000

Amount paid common stockholders = 500000- 450000 = 50000

3)Let par value be "$ 1000"

a) Amount pay to purchase bond = 1000* 111/100 =$ 1110

b)Interest = 1000 *.075 = $ 75                   [1/2 = .5 so 7+.5 = 7.5 ]

c) Current yield =Interest /current price

                = 75 /1110 = 6.76%

d)Maturity = 19 years

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