Problem 7-14 Preferred Stock Valuation Several years ago, Rolen Riders issued pr

ID: 2710696 • Letter: P

Question

Problem 7-14
Preferred Stock Valuation

Several years ago, Rolen Riders issued preferred stock with a stated annual dividend of 11% of its $100 par value. Preferred stock of this type currently yields 7%. Assume dividends are paid annually.

What is the value of Rolen's preferred stock? Round your answer to the nearest cent.
$

Suppose interest rate levels have risen to the point where the preferred stock now yields 15%. What would be the new value of Rolen's preferred stock? Round your answer to the nearest cent.
$