In 2004,Swisten Inc.issued a $150 par value preferred stock that pays an 8 percent annual dividend.Due to changes in the overall economy and in the company's financial condition investors are now requiring an 15 percent return.What price would you be willing to pay for a share of the preferred if you receive your first dividend one year from now?
A) $80
B) $75
C) $59
D) $95
E) $110

Question

Quizplus · Accepted Answer

Dividend $ =.08 \times \$ 150=\$ 12 $
$ \therefore $ Price $ =12 \div 0.15=\$ 80 $