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Novay_Z [31]
3 years ago
10

Test Tech has preferred stock outstanding that pays an $10.85 annual dividend. It price is $125. What is the required rate of re

turn on the preferred stock
Business
1 answer:
Viefleur [7K]3 years ago
3 0

Answer:

8.7%

Explanation:

Calculation to determine the required rate of return on the preferred stock

Using this formula

Required rate of return=Annual dividend/Price

Let plug in the formula

Required rate of return=$10.85/$125

Required rate of return=0.087*100

Required rate of return=8.7%

Therefore the required rate of return on the preferred stock is 8.7%

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