X-Tech Company issued preferred stock many years ago. It carries a fixed dividen

Question

X-Tech Company issued preferred stock many years ago. It carries a fixed dividend of $6 per share. With the passage of time, yields have soared from the original 13 percent to 19 percent (yield is the same as required rate of return). a. What was the original issue price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Original issue price $ b. What is the current value of this preferred stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Current value $

Explanation / Answer

original issue price= fixxed dividend/ YTM

=6/13%=$46.15

b)current value=6/19%=$31.58

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