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Tech Temps has an issue of preferred stock outstanding that pays stockholders a dividend equal to $10 each year.
d. Tech Temps has an issue of preferred stock outstanding that pays stockholders a dividend equal to $10 each year. If the appropriate required rate of return for this stock is 8%, what is its market value?
e. Tech Temps' financial statements show the following information: Average cost of funds 10.0 %
EBIT $ 500,000
Total capital $1,250,000
EPS $2.00
Shares outstanding 150,000
Marginal tax rate 30.0%
(1) Compute the company's economic value added (EVA)
(2) Interpret the value you computed in part l
f. Suppose that normally Tech Temps' P/E ratio is 20x. Using the information given previously, estimate the market price per share for Tech Temps' common stock.
