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alisha [4.7K]
4 years ago
9

A preferred stock is expected to pay a constant quarterly dividend of $1.25 per quarter into the future. The required rate of re

turn, Rs, on the preferred stock is 13.5 percent. What is the fair value (or price) of this stock?
Business
1 answer:
beks73 [17]4 years ago
8 0

Answer:

The share will cost $37.04

Explanation:

We divide the quarterly dividend by the quarterly rate to get the present intrinsic value of the stock:

13.5% = 13.5/100 = 0.135

now we divide by 4:

0.135 / 4 = 0,03375‬ quarterly rate

1.25 / 0.03375 = 37,037037 = $37.04 value of the share according to the present value of their future cash dividends.

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Common allocation bases are a.direct labor dollars, direct labor hours, machine dollars b.direct labor dollars, direct labor hou
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4 years ago
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VARVARA [1.3K]

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Regardless of whether you are looking through the microeconomics microscope or the macroeconomics telescope, the fundamental subject material of the interconnected economy does not change.

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