Question

Shiny Industries producers of crab meat can issue perpetual preferred stock at a price of $31.86 per share. The stock would pay a constant annual dividend of $4.85 per share. What is the company's return on preferred stock (r)

Answer 1

Answer:

the return on the  preferred stock is 15.22%

Explanation:

The computation of the return on the preferred stock is shown below:

Return on Preferred Stock is

= Constant annual Dividend ÷  Price × 100

= $4.85 ÷ $31.86 × 100

= 15.22%

Hence, the return on the  preferred stock is 15.22%

We simply applied the above formula so that the correct value could come

And, the same is to be considered