Question 1 1 pts Bayside Corporation has an issue of preferred stock outstanding that has an...

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Question 1 1 pts Bayside Corporation has an issue of preferred stock outstanding that has an 9.4% dividend rate on a par valu

Answer 1

Answer #1

1.Annual dividend=75*9.4%=$7.05

Intrinsic value=Annual dividend/required return

=7.05/0.125

=$56.4

2.Required return=(End value-Beginning value+Dividend)/Beginning value

0.11=(End value-60+4.35)/60

(0.11*60)=End value-55.65

End value=6.6+55.65

=$62.25

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Answer 2

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