Answered

Welcome to Westonci.ca, your go-to destination for finding answers to all your questions. Join our expert community today! Our platform offers a seamless experience for finding reliable answers from a network of knowledgeable professionals. Discover in-depth answers to your questions from a wide network of professionals on our user-friendly Q&A platform.

Earley Corporation issued perpetual preferred stock with an 8% annual dividend. The stock currently yields 6%, and its par value is $100. Round your answers to the nearest cent. What is the stock's value

Sagot :

Kolawole845

Answer:

Value of stock = $133.33

Explanation:

The value of a preferred stock is the present value of the constant dividend payable for the foreseeable future discounted at the required rate of return

Price = Constant dividend/ required return

The constant dividend = Dividend rate × par value= 8%*100= 8

Requited return - 6%

So the price of the stock would be

Price = 8/0.06=133.33

Value of stock = $133.33

Thank you for choosing our service. We're dedicated to providing the best answers for all your questions. Visit us again. We appreciate your time. Please revisit us for more reliable answers to any questions you may have. Find reliable answers at Westonci.ca. Visit us again for the latest updates and expert advice.