A preferred stock pays an annual dividend of $7. What is one share of this stock
ID: 2706092 • Letter: A
Question
- A preferred stock pays an annual dividend of $7. What is one share of this stock worth to you today if you require a 14 percent rate of return? Answer
$6.14
$7.98
$43.00
$50.00
$98.00
- A preferred stock pays an annual dividend of $7. What is one share of this stock worth to you today if you require a 14 percent rate of return? Answer
$6.14
$7.98
$43.00
$50.00
$98.00
$6.14
$7.98
$43.00
$50.00
$98.00 A preferred stock pays an annual dividend of $7. What is one share of this stock worth to you today if you require a 14 percent rate of return? A preferred stock pays an annual dividend of $7. What is one share of this stock worth to you today if you require a 14 percent rate of return? $6.14 $7.98 $43.00 $50.00 $98.00
$6.14
$7.98
$43.00
$50.00
$98.00
Explanation / Answer
The PV of a preferred stock is dividend/discount rate
Dividend is $7 and rate is 14%. The maximum amount to be paid is 7/.14 = $50
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