Jacob Corporation is growing at a constant rate of 6 percent per year. It has both common stock and non participating preferred stock outstanding. The cost of preferred stock (rP) is 8 percent. The par value of the preferred stock is P100, and the stock has a stated dividend of 10 percent of par. What is the market value of the preferred stock?

Intermediate Financial Management (MindTap Course List)
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Author:Eugene F. Brigham, Phillip R. Daves
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Chapter8: Basic Stock Valuation
Section: Chapter Questions
Problem 14P
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Jacob Corporation is growing at a constant rate of 6 percent per year. It has both common stock and non participating preferred stock outstanding. The cost of preferred stock (rP) is 8 percent. The par value of the preferred stock is P100, and the stock has a stated dividend of 10 percent of par.

What is the market value of the preferred stock?

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