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Value of Shares: Dupont, Hooks Athletics, AT&T, Boeing, Johnson

Determine the value of a share of DuPont Series A $4.50 cumulative preferred stock, no par, to an investor who requies a 9 percent rate of return on this security. The issue is callable at $120 per share plus accrued dividens. However, the issue is not expected to be called at any time in the foreseeable future.

Hooks Athletics, Inc., has outstanding a preferred stock with a par value of $30 that pays a dividend of $2.50. The preferred stock is redeemable at the option of the stockholder in 10 years at a price equal to $30. The stock may be called for redemption by the company in 15 years at the price of $32.50. (Any stock that is not redeemed at the end of 10 years can be expected to be called by the comany in 15 years). If you know that investors require a 15 percent pretax rate of return on this preferred stock, what is the current market value of this preferred stock?

The following stock quotation were recently reported in The Wall Street Journal:

10.3 AT&T T 3.6 21 39.43 0.26
0.1 Boeing BA 1.6 31 88.91 -0.85
-8.7 JohnsJohns JNJ 2.5 16 60.26 -0.08

a. What are the dividend yields on the common stock of AT&T Boeing, and Johnson & Johnson?

b. What possible explanation can you give for the differences in the common stock dividend yields observed in Part A?

c. What is the current price-earnings ratio for Boeing and Johnson & Johnson?

d. What possible explanation can you give for the difference in the price-earnings ratio observed in Part C?

e. What was the previous day's closing price for AT&T's common stock?

Blue Moon Corporation has one million shares of common stock outstanding. In a typical annual election for the board of directors, shareholders representing 70 percent of the shares outstanding exercise their right to vote. The company has nine members on it board of directors, all of whom are elected annually.

a. If the company uses a majority voting procedure to elect its board, now many votes are requied to elect
1. One director
2. Two directors
3. A majority of the members of the board of directors.

b. If the company uses a cummulative voting procedure, how many votes are required to elect
1. One director
2. Two directors
3. A majority of the members of the board of directors.

Solution Summary

This solution shows step-by-step calculations to determine the values of shares in multiple scenarios involving case study companies like Dupont, Hooks Athletics, AT&T, Boeing, Johnson & Johnson and others.

$2.19