Question

The preferred stock of ABC Co. offers a rate of return of 7.87 percent. The stock is currently priced at $63.53 per share. What is the amount of the annual dividend

Answer 1

Annual Dividend = $5.00

Step-by-step explanation:

We can use the following formula to calculate the stock price.

P = Annual Dividend / r

P: stock price (Given: $63.53)

r: required return (7.87%)

By inputting the number into the above equation, we have the following:

63.53 = Annual Dividend / 0.0787

--> Annual Dividend = $5.00