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Mnenie [13.5K]
3 years ago
11

Voltanis Corp. has preferred stock outstanding that will pay an annual dividend of $4.29 every year in perpetuity. If the stock

currently sells for $101.03 per share, what is the required return?a. 3.82%b. 3.97%c. 4.25%d. 2.36%e. 4.85%
Business
1 answer:
ivolga24 [154]3 years ago
4 0

Answer:

The appropriate choice is Option c (4.25%).

Explanation:

Given:

Annual dividend,

= $4.29

Price per share,

= $101.03

Now,

The required return will be:

= \frac{Annual \ dividend}{Price \ per \ share}

= \frac{4.29}{101.03}

= 0.04246

or,

= 4.25 (%)

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