Polar Bear, Inc., has an issue of preferred stock outstanding that pays a $2.85 dividend every...

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Polar Bear, Inc., has an issue of preferred stock outstanding that pays a $2.85 dividend every...

Polar Bear, Inc., has an issue of preferred stock outstanding that pays a $2.85 dividend every year, in perpetuity. If this issue currently sells for $57.32 per share, what is the required return?

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Answer 1

Answer #1

Answer is 4.97%

Annual Dividend = $2.85
Current Price = $57.32

Required Return = Annual Dividend / Current Price
Required Return = $2.85 / $57.32
Required Return = 0.0497 or 4.97%

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Answer 2

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