Question

J&J Foods wants to issue 5.4 percent preferred stock with a stated liquidating value of $100 a share. The company has determined that stocks with similar characteristics provide a return of 8.2 percent. What should the offer price be?

Answer 1

Answer:

$65.85

Explanation:

Calculation for What should the offer price be

Using this formula

Offer price=(Preferred stock× Liquidating value)/Return

Let plug in the formula

Offer price = (0.054 × $100) / 0.082

Offer price=5.4/0.082

Offer price = $65.85

Therefore the offer price should be $65.85

Answer 2

The offer price is the price that is set by the person who sells the goods and services. It is the price of the particular stock or the share that is defined by the stock exchange or the market forces.

The offer price is $65.85

 

 $\begin{aligned}\text{Offer price}&=\frac{Preferred stock\times Liquidating value}{Return} \\&= \frac{0.054 \times \ 100}{0.082}\\&=\frac{5.4}{0.082}\\ &= \ 65.85\end{aligned}$

Therefore the offer price should be $65.85

To know more about the offer price and its calculation, refer to the link below:

https://brainly.com/question/14600980