Question

How much would you pay for a share of preferred stock that pays a $3.75 dividend and your required return is 5.25%

Answer 1

$71.43 per share

Step-by-step explanation:

Price to pay (Present value) = Annual Dividend / Required return

Price to pay (Present value) = $3.75 / 0.0525

Price to pay (Present value) = 71.42857142857143

Price to pay (Present value) = $71.43 per share