E-Eyes.com just issued some new preferred stock. The issue will pay an annual dividend of $23 in perpetuity, beg...

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business finance

Answer 1

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Answer #1

Price of Preferred Stock = Annual Dividend/Interest Rate

So,

Price of Preferred Stock in Year 11 = 23/0.037

Price of Preferred Stock in Year 11 = $621.62

Price of Preferred Stock now = 621.62/(1.037)¹¹

Price of Preferred Stock = $416.83

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Answer 2

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