contestada

A preferred stock from Duquesne Light Company (DQUPRA) pays $3.20 in annual dividends. If the required return on the preferred stock is 6.10 percent, what’s the value of the stock? (Round your answer to 2 decimal places.)

Respuesta :

Answer:

the value of the preferred stock is $52.46

Explanation:

The computation of the value of the stock is shown below:

As we know that

The Required rate of return = dividend ÷ value of stock

It can be rearranged as

The value of the preferred stock is

= dividend ÷  required rate of return

= $3.20 ÷ 6.1%

= $52.46

Hence, the value of the preferred stock is $52.46

We simply applied the above formula so that the correct value could come

And, the same is to be considered