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jeyben [28]
3 years ago
9

Kindzi Co. has preferred stock outstanding that is expected to pay an annual dividend of $4.74 every year in perpetuity. If the

required return is 4.59 percent, what is the current stock price
Business
1 answer:
olasank [31]3 years ago
3 0

Answer:

The price of the preferred stock today is $103.27

Explanation:

The preferred stock pays a constant dividend after equal intervals of time and has an indefinite maturity. Thus, a preferred stock is just like a perpetuity. The value or price of a perpetuity can be calculated using the following formula.

The price or a perpetuity:

P = Cash Flow / r

As the cash flow in this case is dividends so we will use dividends in place of cash flow and divide by the required rate of return.

P = 4.74 / 0.0459

P = $103.267 rounded off to $103.27

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Answer:

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E.g. something like this happened

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3 years ago
Elizabeth is marketing a new type of picture frame that she invented. She has developed a full identity for the product and want
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3 years ago
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A, B, and D

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