The required rate of return on TKF preference shares has 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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Quizplus · Accepted Answer

The original price of a preference share can be calculated using the formula: Price = Dividend / Required Rate of Return. Since the share now sells for $115 at a 5% rate, the dividend is $115 * 5% = $5.75. Originally, the required rate was 5.75%, so the original price was $5.75 / 5.75% = $100.

The Required Rate of Return on TKF Preference Shares Has