Question
Asked Oct 8, 2019
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A preferred stock has a par value of $110 and pays an annual dividend of 5% of par. If similar investments have an annual rate of return of 3%, what is the current value of this preferred stock. (round to nearest cent)

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Expert Answer

Step 1

Computation of current preferred stock value:

Hence, the current preferred stock value is $183.33.

 

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A Amount 1 Particulars 2 Par value $110.00 3 Annual dividend 5% 3% 4 Rate of return 5Value of stock $183.33

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