Question

Please show all work. Provide steps and formulas to how you got your answer. This is so I can learn how to do these problems.

Question 3 TTK Corp. preferred stock pays a $10 annual dividend per share. big, boob uliofasi (3.1) What is the price of a share of TTK preferred if similar-risk preferred yields 8%? O ver the (3.2) What is the price of comparable preferred yields 11%? vields 112

Answer 1

(1)-Price of a share of TTK preferred stock if the similar-risk preferred yields 8.00%

The price that would be willing to pay for the preference share is calculated by using the following formula

Here, we’ve Annual Preferred Dividend per share = $10.00 per share

Required Rate of Return = 8.00%

Therefore, the Price of the Preferred Stock = Annual Preferred Dividend / Required rate of return

= $10.00 per share / 0.08

= $125.00 per share

(2)-The Price of a share of TTK preferred stock if the similar-risk preferred yields 11.00%

The Price of the Preferred Stock = Annual Preferred Dividend / Required rate of return

= $10.00 per share / 0.11

= $90.91 per share