Question

zylo inc preferred stock pays a 7.50 annual dividend. What is the maximum price you are willing to pay for one share of this stock todya is your required return is 9.75

Answer 1

Answer: $76.92

Explanation:

From the question, Zylo inc preferred stock pays a 7.50 annual dividend, the maximum price that will be willing to be paid for one share of this stock today if the required return is 9.75% will be calculated as:

= Dividend / Required return

= $7.50 / 9.75%

= $7.50/0.0975

= $76.92

The maximum price willing to be paid is $76.92.