Question

Kindzi Co. has preferred stock outstanding that is expected to pay an annual dividend of $3.55 every year in perpetuity. If the required return is 3.74 percent, what is the current stock price?

Answer 1

$94.92 is the correct answer

Step-by-step explanation:

Given, Annual dividend = $3.55

Required return = 3.74%

The calculation of current stock price is as follows:

The current stock price = Annual Dividend / required return

= $ 3.55 / 3.74%

= $ 94.919786

= $ 94.92

Hence the correct answer is $ 94.92

Note: The answer is rounded off to two decimal places.