A preferred stock from DLC pays $3.00 in annual dividends. If the required return on the preferred stock is 9.3%, what is the value of the stock?

Question

Quizplus · Accepted Answer

The value of the preferred stock can be calculated using the formula: 
Value of preferred stock = Annual dividends / Required return 
Plugging in the values: 
Value of preferred stock = $3.00 / 0.093 
Value of preferred stock = $32.26 
Therefore, the best choice is B.

A Preferred Stock from DLC Pays $3