Question

Stimpson Inc. preferred stock pays a $.50 annual dividend. What is the value of the stock if your required rate of return is 10%

Answer 1

$5.00

Step-by-step explanation:

Market value can be regarded as the agreed price where both the buyer and seller perform their transaction, i.e the price buyer willing to buy and the seller willing to sell, which is intrinsic

Given

annual dividend= $50

rate of return = 10%

value of the stock = (annual dividend)×(rate of return)

=$50 *0.10

= $5.00