Fifth National Bank just issued some new preferred stock. The issue will pay an annual dividend of $22 in perpetuity, beginning 11 years from now. If the market requires a return of 3.6 percent on this investment, how much does a share of preferred stock cost today

$429.06

Explanation:

The computation of the cost of today preferred stock share is shown below:

But before that first determine the preferred stock value of 11 years from now which is

= Annual dividend ÷ rate of return

= $22 ÷ 0.036

= $611.11

Now the current value is

= $611.11 × Present value of discount factor at 3.6% in 10 years  

= $611.11 ÷ 1.036^10

= $429.06

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.