Principal Financial, Inc. has an issue of preferred stock that pays a dividend of $1.625. The preferred stockholders req...

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Principal Financial, Inc. has an issue of preferred stock that pays a dividend of $1.625. The preferred stockholders req...

Principal Financial, Inc. has an issue of preferred stock that pays a dividend of $1.625. The preferred stockholders require a rate of return on this stock of 7.5 %. At what price should the preferred stock sell for? Round off to the nearest $0.10.

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Answer 1

Answer #1

Value of Preferred stock = Annual Dividend/Required Rate of Return

Value of preferred stock = $1.625/7.5%

Value of preferred stock = $21.67

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Answer 2

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Principal Financial, Inc. has an issue of preferred stock that pays a dividend of $1.625. The preferred stockholders req...

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