Answer:
the value of the preferred stock is $52.46
Explanation:
The computation of the value of the stock is shown below:
As we know that
The Required rate of return = dividend ÷ value of stock
It can be rearranged as
The value of the preferred stock is
= dividend ÷ required rate of return
= $3.20 ÷ 6.1%
= $52.46
Hence, the value of the preferred stock is $52.46
We simply applied the above formula so that the correct value could come
And, the same is to be considered
