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Preferred stock has a par (face) value of $80. The annual dividend is $6.00 per share....

Preferred stock has a par (face) value of $80. The annual dividend is $6.00 per share. Investors in this preferred stock have a required rate of return equal to 8%. Compute the current price of a share of the preferred stock.

Round to the second decimal place

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Answer #1

Price of a share of preferred stock = Annual dividend per share / Required rate of return

                                                       = $ 6/0.08 = $ 75

Current price of a share of preferred stock is $ 75.

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