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17 September, 13:18

The preferred stock of ABC Co. offers a rate of return of 7.87 percent. The stock is currently priced at $63.53 per share. What is the amount of the annual dividend

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  1. 17 September, 14:56
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    Annual Dividend = $5.00

    Explanation:

    We can use the following formula to calculate the stock price.

    P = Annual Dividend / r

    P: stock price (Given: $63.53)

    r: required return (7.87%)

    By inputting the number into the above equation, we have the following:

    63.53 = Annual Dividend / 0.0787

    --> Annual Dividend = $5.00
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