What is the annual divided on TXS preferred stock? If investors require a return

Question

What is the annual divided on TXS preferred stock? If investors require a return of 8% on this stock and the next dividend ids payable is payable 1 year from now , what is price of TXS preferred stock? Suppose that TXS has not paid dividends on its preferred shares in the last 2 years , but investors believe that it will start returns? Common stock value: Zero growth Kelsey Drums, Inc., is a well-established supplier of fine percussion instruments to orchestras all over the United States. The company's class A common stock has paid a dividend of $5.00 per share per year for the last 15 years. Management expects to continue to pay at that amount for the foreseeable future. Sally Talbot purchased 100 shares of Kelsey class A common 10 years ago at a time when the required rate of return for the stock was 16%. She wants to sell her shares today. The current required rate of return for the Stock is 12%. How much capital gain or loss will Sally have on her shares? Preferred stock valuation Jones Design wishes to estimate the value of its outstanding preferred stock. The preferred issue has an $80 par value and pays an annual dividend of $6.40 per share. Similar-risk preferred stock are currently earring.

Explanation / Answer

The total divedend earned by sally in 10 years is

10 × 5 × 100 = 5000 is dividend gain

0.16 p0 = p1 - p0

0.12 p0 =p1 - p0

adding both equation

0.28 p0 = 2×( p1 - p0)

0.14 = p1 - p0 / p0

So capital gain is 14 %.

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