How much would you pay for a share of preferred stock that pays a $3.75 dividend and your required return is 5.25%

Question

asked Dec 1, 2021 29.7k views

1 Answer

Sean Stopnik · Answer 1 · 2021-12-05T11:36:58+0000

Answer:

$71.43 per share

Step-by-step explanation:

Price to pay (Present value) = Annual Dividend / Required return

Price to pay (Present value) = $3.75 / 0.0525

Price to pay (Present value) = 71.42857142857143

Price to pay (Present value) = $71.43 per share