Mackery, Inc., has an outstanding issue of preferred stock that pays a $5.06 dividend every year....

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Mackery, Inc., has an outstanding issue of preferred stock that pays a $5.06 dividend every year....

Mackery, Inc., has an outstanding issue of preferred stock that pays a $5.06 dividend every year. If this issue currently sells for $104.49 per share, what return to market investors require on it currently? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).)

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Answer 1

Answer #1

PV of perpetual CF = Perpetual CF/(interest rate-growth rate)

104.49 = 5.06/(interest rate%-0)

interest rate% = 4.84

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Answer 2

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Mackery, Inc., has an outstanding issue of preferred stock that pays a $5.06 dividend every year....

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Mackery, Inc., has an outstanding issue of preferred stock that pays a $5.06 dividend every year....

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