Determine the required rate of return on preferred shares that provide a $4.00 annual dividend if they are presently selling for $50.

Name: Determine the required rate of return on preferred shares that provide a $4.00 annual dividend if they are presently selling for $50.
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Question

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The required rate of return is calculated by dividing the annual dividend by the current price of the preferred shares: $4.00 / $50 = 0.08 or 8.0%.

Determine the Required Rate of Return on Preferred Shares That