Final answer:
The value of the Allied Northern preferred stock at a 9.5 percent return is approximately $40.42, calculated using the dividend discount model by dividing the annual dividend of $3.84 by the required rate of return of 0.095.
Step-by-step explanation:
The value of a preferred stock can be calculated using the dividend discount model (DDM), which is based on the present value of the future dividends expected to be generated by the stock. If an Allied Northern preferred stock pays a $3.84 annual dividend and investors are seeking a 9.5 percent return, the value of the stock can be determined by dividing the annual dividend by the desired return rate.
Using the formula Price = Dividend / Required Rate of Return, we have:
Price = $3.84 / 0.095 = $40.42.
Therefore, the value of the preferred stock at a 9.5 percent return is approximately $40.42.