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7 November, 00:27

Bedekar, Inc., has an issue of preferred stock outstanding that pays a $3.40 dividend every year in perpetuity. If this issue currently sells for $91 per share, what is the required return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)

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  1. 7 November, 02:35
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    3.74%

    Explanation:

    The computation of the required rate of return is shown below:

    = (Annual dividend paid : Current selling price of preferred stock) * 100

    = ($3.40 : $91) * 100

    = 3.74%

    Simply we divide the annual dividend paid by the Current selling price of preferred stock so that the accurate required rate of return can come.
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