Lindell, Inc.has 8% , $100 par value preferred stock outstanding.To earn 12% on an investment in this stock, you need to purchase the shares at a per share price of

Question

Quizplus · Accepted Answer

To earn a 12% return on the investment, the preferred stock must have a dividend yield of 12%.

Dividend yield = Annual dividend / Market price per share

0.12 = $8 / P

P = $8 / 0.12

P = $66.67

Therefore, to earn a 12% return on the investment, you need to purchase the stock at $66.67 per share.