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1.A $1,000 face value preferred share with an annual coupon of $60 is available on the...

1.A $1,000 face value preferred share with an annual coupon of $60 is available on the market. What is the value of this preferred share if the relevant discount rate for valuation purposes is 7%?

Select one:a. $1,062.22b. $1,000.00c. $857.14d. $796.73e. None of the above

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Answer #1

Ans c. $857.14

Cost of preferred stock =Annual Dividend / Discount rate

                                 = 60 / 7%

                                  = $857.14

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