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11 March, 03:04

Edinburgh Exports pays an annual dividend rate of 8.00% on its preferred stock that currently returns 10.72% and has a par value of $100.00 per share. What is the value of Edinburgh's preferred stock?

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  1. 11 March, 03:30
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    The value of Edinburgh's preferred stock is $74.63

    Explanation:

    Preferred dividend are the fix amount payment which represents the perpetuity, the company can repurchase the preferred share as it is callable.

    Dividend = $100 x 8% = $8

    Price of Preferred Share = Dividend / Rate of return

    Price of Preferred Share = $8 / 10.72%

    Price of Preferred Share = $8 / 0.1072

    Price of Preferred Share = $74.63
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Home » Business » Edinburgh Exports pays an annual dividend rate of 8.00% on its preferred stock that currently returns 10.72% and has a par value of $100.00 per share. What is the value of Edinburgh's preferred stock?
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