Annuity and dividends for common stocks

Reference no: EM1330293

1) Morgan Jennings, a geography professor, invests $50,000 in a parcel of land that is expected to increase in value by 12 percent per year for the next five years. He will take the proceeds and provide himself with a 10-year annuity a 12 percent interest rate, how much will this annuity be?

2) Folic Acid, Inc., has $20 million in earnings, pays $2.75 million in interest to bondholders, and $1.80 million in dividends to preferred stockholders.

a. What are the common stockholders' residual claims to earnings?

b. What are the common stockholders' legal, enforceable claims to dividends?

Reference no: EM1330293

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