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PREFERRED STOCK VALUATION Farley Inc. has perpetual preferred stock outstanding that sells for $30.00 a share...

PREFERRED STOCK VALUATION

Farley Inc. has perpetual preferred stock outstanding that sells for $30.00 a share and pays a dividend of $3.00 at the end of each year. What is the required rate of return? Round your answer to two decimal places.

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Answer #1

Ans 10.00%

required rate of return = Dividend / Price of Share * 100

                                    = 3 / 30 * 100

                                   = 10.00%

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