What is the value of a preferred stock

Question

Task: The demand for good X has been estimated to be lnQ_x^d = 100 − 2.5 ln P_X + 4 ln P_Y + ln M. The income elasticity of good X is:
 
4.0.   
 
1.0.   
 
2.0.   
 
- 2.5.   

Question 1: What is the value of a preferred stock that pays a perpetual dividend of $150 at the end of each year when the interest rate is 3 percent?

Instruction: Round your response to the nearest dollar.

Question 2: You’ve recently learned that the company where you work is being sold for $380,000. The company’s income statement indicates current profits of $15,000, which have yet to be paid out as dividends. Assuming the company will remain a “going concern” indefinitely and that the interest rate will remain constant at 6 percent, at what constant rate does the owner believe that profits will grow?

Instruction: Round your response to 2 decimal places.

Question 3: The supply curve for product X is given by Q_X^S = -460 + 20P_X.

a. Find the inverse supply curve.

P = _______+________Q

b. How much surplus do producers receive when Qx = 380? When Qx = 1,120?

When Q_X = 380

When Q_X = 1,120

Suppose the cross-price elasticity of demand between goods X and Y is 5. How much would the price of good Y have to change in order to change the consumption of good X by 40 percent?

If Starbucks’s marketing department estimates the income elasticity of demand for its coffee to be 1.7, how will the prospect of an economic boom (expected to increase consumers’ incomes by 4 percent over the next year) impact the quantity of coffee Starbucks expects to sell?

Instruction: Round your response to 2 decimal places.