Question

Maynard Inc. preferred stock pays an annual dividend of $7 per share. Which of the following statements is true for an investor with a required return of 9%?A) The value of the preferred stock is $77.78 per share.B) The value of the preferred stock is $7 because the dividend is fixed at $7 each year .C) The value of the preferred stock is $63.00 per share.D) The value of the preferred stock is $6.30 per share because of the 9% required return.

Answer 1

A. The value of the preferred stock is $77.78 per share