The preferred stock of XYZ Corp. pays a fixed annual dividend of $6. It has a...

Question

Question

The preferred stock of XYZ Corp. pays a fixed annual dividend of $6. It has a...

The preferred stock of XYZ Corp. pays a fixed annual dividend of $6. It has a required rate of return of 12 percent. Compute the price of the preferred stock.

business finance

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Price of preferred Stock = Annual Dividend/Required Rate of Return

= 6/12%

= $50

Hence, price = $50

Add a comment

Answer 2

Similar Homework Help Questions

he preferred stock of Denver Savings and Loan pays an annual dividend of $6.40. It has a required rate of return of 8 pe...

he preferred stock of Denver Savings and Loan pays an annual dividend of $6.40. It has a required rate of return of 8 percent. Compute the price of the preferred stock.
Achi Corp, has preferred stock with an annual dividend of $3.19

Achi Corp, has preferred stock with an annual dividend of $3.19. If the required return on Achi's preferred stock is 8.4%, what is its price? (Hint: For a preferred stock. the dividend growth rate is zero.) Achi's stock price will be $ _______ (Round to the nearest cent.)
Achi Corp. has preferred stock with an annual dividend of $3.22

Achi Corp. has preferred stock with an annual dividend of $3.22. If the required return on Achi's preferred stock is 7.7%, what is its price? (Hint: For a preferred stock, the dividend growth rate is zero.) Achi's stock price will be $ _______ . (Round to the nearest cent.)

4. The preferred stock of You Corp pays a $3.75 dividend. What is the value of...

4. The preferred stock of You Corp pays a $3.75 dividend. What is the value of the stock of your required return is 8.5%? Look at valuation for preferred stock 5. You are looking to invest in a company that has 10.5% return on equity and retains 60% of its earnings for reinvestment purposes. The company recently paid a dividend of $3.75 and the stock is currently selling for $45. Look at valuation for common stock A) What is the...
Munger Corp. has preferred stock outstanding that will pay an annual dividend of $5.20 per share...

Munger Corp. has preferred stock outstanding that will pay an annual dividend of $5.20 per share (indefinately) with the first dividend exactly 12 years from today. If the required return is 9.3 percent, what is the current price of Munger Corp. stock? Multiple Choice $19.23 $21.02 $87.53 $81.08 $55.91
1. Big Oil, Inc. has a preferred stock outstanding that pays a $7 annual dividend. If...

1. Big Oil, Inc. has a preferred stock outstanding that pays a $7 annual dividend. If investors' required rate of return is 10 percent, what is the market value of the shares? If the required return declines to 6 percent, what is the change in the price of the stock? 2. What should be the prices of the following preferred stocks if comparable securities yield 7 percent? Why are the valuations different? a. MN, Inc., $8 preferred ($100 par) b....

Big Oil, Inc. has a preferred stock outstanding that pays a $5 annual dividend. If investors’...

Big Oil, Inc. has a preferred stock outstanding that pays a $5 annual dividend. If investors’ required rate of return is 5 percent, what is the market value of the shares? Round your answer to the nearest cent. $ _____ If the required return declines to 2 percent, what is the change in the price of the stock? Round your answer to the nearest cent. The price____ (increases or decreases) by $ _____
2 You have the opportunity to buy a preferred stock which pays an $8.50 annual dividend....

2 You have the opportunity to buy a preferred stock which pays an $8.50 annual dividend. Your required rate of return on this investment is 12 percent. What is the highest price you would pay? (5 points)
Hibernia Corp has an outstanding issue of perpetual preferred stock with an annual dividend of $19.5...

Hibernia Corp has an outstanding issue of perpetual preferred stock with an annual dividend of $19.5 per share. If the required return on this preferred stock is 5%, at what price should the stock sell? Be mindful of rounding off your answer at two decimal points. For instance, 12.0303 = 12.03

The preferred stock of XYZ Corp. pays a fixed annual dividend of $6. It has a...

Homework Answers

Add Answer to:
The preferred stock of XYZ Corp. pays a fixed annual dividend of $6. It has a...

Post as a guest

Earn Coins

he preferred stock of Denver Savings and Loan pays an annual dividend of $6.40. It has a required rate of return of 8 pe...

Achi Corp, has preferred stock with an annual dividend of $3.19

Achi Corp. has preferred stock with an annual dividend of $3.22

4. The preferred stock of You Corp pays a $3.75 dividend. What is the value of...

Munger Corp. has preferred stock outstanding that will pay an annual dividend of $5.20 per share...

1. Big Oil, Inc. has a preferred stock outstanding that pays a $7 annual dividend. If...

Big Oil, Inc. has a preferred stock outstanding that pays a $5 annual dividend. If investors’...

2 You have the opportunity to buy a preferred stock which pays an $8.50 annual dividend....

Hibernia Corp has an outstanding issue of perpetual preferred stock with an annual dividend of $19.5...

The preferred stock of XYZ Corp. pays a fixed annual dividend of $6. It has a...

Homework Answers

Add Answer to: The preferred stock of XYZ Corp. pays a fixed annual dividend of $6. It has a...

Post as a guest

Earn Coins

Add Answer to:
The preferred stock of XYZ Corp. pays a fixed annual dividend of $6. It has a...