John, Inc., has an issue of preferred stock outstanding that pays a dividend of $6.55 every...

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John, Inc., has an issue of preferred stock outstanding that pays a dividend of $6.55 every...

John, Inc., has an issue of preferred stock outstanding that pays a dividend of $6.55 every year in perpetuity. If this issue currently sells for $91 per share, what is the required return?

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Answer 1

Answer #1

The required return is computed as shown below:

= Annual Dividend / Price per share

= $ 6.55 / $ 91

= 7.20% Approximately

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Answer 2

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