Bon Temps has an issue of preferred stock outstanding that pays stockholders a dividend equal to...

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Bon Temps has an issue of preferred stock outstanding that pays stockholders a dividend equal to...

Bon Temps has an issue of preferred stock outstanding that pays stockholders a dividend equal to $10 each year. If the appropriate required rate of return for this stock is 8%, what is its market value?

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Answer 1

Answer #1

market value=Annual dividend/ required rate of return

=10/0.08

which is equal to

=$125

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Answer 2

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