A preferred stock pays a dividend of $2.00 in perpetuity. If the return required by shareholders...

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Question

A preferred stock pays a dividend of $2.00 in perpetuity. If the return required by shareholders...

A preferred stock pays a dividend of $2.00 in perpetuity. If the return required by shareholders is 7%, then the price per share for this preferred stock is ________.

A)$25.74

B)$18.69

C)$30.57

D)$28.57

E)none of the above

business finance

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Answer 1

Answer #1

Price per share = Perpetual cash flow / required return

Price per share = 2 / 0.07

Price per share = $28.57

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Answer 2

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