The required rate of return on TKF preferred shares have fallen from 5.75% at the time of issue to the present rate of 5%.The share now sells for $115.What was the original price?

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The original price of the preferred shares can be calculated using the dividend formula for preferred stocks: Dividend = Rate of Return * Original Price. Since the rate has fallen to 5% and the shares now sell for $115, we can assume the dividend remains constant. The original rate of return was 5.75%. Let's denote the original price as P. The equation based on the current price and rate would be Dividend = 5% * $115. To find the original price, we rearrange the formula: Dividend = 5.75% * P. Since the dividend amount is the same in both cases, we can set the equations equal to each other but solve for P using the original rate of return, leading us to conclude that the original price was $100.

The Required Rate of Return on TKF Preferred Shares Have