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ahrayia [7]
3 years ago
7

Moraine, Inc., has an issue of preferred stock outstanding that pays a $6.55 dividend every year in perpetuity. If this issue cu

rrently sells for $91 per share, what is the required return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places
Business
1 answer:
Lorico [155]3 years ago
8 0

Answer:

7.20%

Explanation:

In this question, we are to calculate the required return.

From the question we identify the following;

Next dividend = $6.55

required return = ?

Share price = $91

Mathematically;

share price = Dividend/Rate of return

Hence;

Rate of return = Dividend/share price = 6.55/91

Rate of return = 0.071978021978022

= 7.20%

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