Resnor, Inc., has an issue of preferred stock outstanding that pays a

QUESTION

Resnor, Inc., has an issue of preferred stock outstanding that pays a $14.25 dividend every year in perpetuity. If this issue currently sells for $84 per share, the required return is(____) percent. Round your answer to 2 decimal places.
According to the given information,Dividend for Preferred stock = $14.25Required rate of return = ?Current price of the preferred stock = $84The formula for calculating the Required return on preferred stock is Rp = D /

e D is the annual Dividend P0 is the price of the stock Rp = $14.25 / $84 = 0.1696 or 16.96%Therefore, the required return on Preferred stock is 16.96%

ANSWER:

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