Smiling Elephant, Inc., has an issue of preferred stock outstanding that pays a $4.70 dividend every year, in perpetuity. If

Smiling Elephant, Inc., has an issue of preferred stock outstanding that pays a $4.70 dividend every year, in perpetuity. If this issue currently sells for $79.95 per share, what is the required return

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  1. sound is invisible, but sometimes we can feel it. when a kettle-drum is thumped with a stick that time the tight drum skin moving up and down very quickly for some time and then it pumped sound waves into the air. loudspeakers also work in a similar manner.

    components of a speaker:

    electromagnet

    in order to translate an electrical signal into an audible sound, an electromagnet is used in looudspeakers

      suspension

    suspension is used to   center the voice coil in the gap of the magnet and it exerts a restoring force to keep it there. suspension is used to limits the maximum mechanical excursion of the diaphragm and voice coil.

    voice coil

    voice coil is a coil of wire which is attached to the apex of a loudspeaker cone. it provides the motive force to the cone by the reaction of a magnetic field to the current passing through it.

    cone

    in a   loudspeaker, a   thin, semi-rigid membrane attached to the voice coil, which moves in a magnetic gap due to which it vibrates   and produced sound. it is known as diaphragm and it can also be called a cone, though not all speaker diaphragms are cone-shaped.

    surround

    surround is also known as front suspension. surround is used to join the cone to the chassis. together with the suspension it controls the cone excursion, and it is also used to   determine how energy which is   travelling through the cone is absorbed, and how the speaker limits when it reaches the ends of its travel.

    dustcap

    dustcap is used to protect the voice coil from dust and dirt. it is a part of the cone.

    how speaker work

    the outer part of the cone is fastened to the outer part of the loudspeaker's circular metal rim. the inner part is fixed to   voice coil that sits just in front of a permanent magnet . when loudspeaker is hooked up to a stereo, electrical signals feed through the speaker cables into the coil. it will convert the coil into an electromagnet magnet . when electricity flows back and forth in the cables, the electromagnet either repels or attract the permanent magnet. this moves the coil back and forth, and it pull and push the loudspeaker cone. like a drum skin vibrating back and forth, the moving cone pumps sounds out into the air.in this way loudspeakers works.

  2. The required rate of return is 5.88%

    Explanation:

    A constant cash flow with indefinite period of time is called perpetuity. In this question a perpetual payment of dividend is being made. so the price of the share is calculated by the formula of perpetuity.

    Rate of return can be calculated from the perpetuity formula

    Present value of perpetuity = Cash flows / Required rate of return

    Present value of perpetuity = Cash flows / Required rate of return

    $79.95 = $4.70 / Required rate of return

    Required rate of return = $4.70 / $79.95 = 0.0588 = 5.88%

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