Big Manufacturer, Inc.’s perpetual preferred stock has an annual dividend of $5.95 per share and is...
Big Manufacturer, Inc.’s perpetual preferred stock has an annual dividend of $5.95 per share and is selling in the market for $95.00 per share. If your required return on this preferred stock is 7.0%, what is the intrinsic value of this preferred stock?
Homework Answers
| Answer | ||
| Annual Dividend = $5.95 | ||
| Required Return = 7.0% | ||
| Intrinsic Value = Annual Dividend / Required Return | ||
| $5.95 / 0.07 | ||
| $85 | ||
| So, intrinsic value of this preferred stock is $85 | ||
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