Parrino, Fundamentals of Corporate Finance, 3e FINANCIAL MANAGEMENT Gradebook OR
ID: 2800662 • Letter: P
Question
Parrino, Fundamentals of Corporate Finance, 3e FINANCIAL MANAGEMENT Gradebook ORION Downloadable eTextbook nt VERSION ·BACK Problem 9.15 The First Bank of Flagstaff has issued perpetual preferred stock with a $100 par value. The bank pays a quarterly dividend of $1.65 on this stock. What is the current price of this preferred stock given a required rate of return of 10.25 percent? (Round answer to 2 decimal places, e.g. 15.25.) t price By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor Question Attempts: 0 of 3 used SAVE FOR RSUBHIT ANSWER Earn Maximum Points available only if you answer this question correctly in two attempts or less.Explanation / Answer
anuual dividend = quaterly dividend * 4
= 1.65 * 4
= 6.60
current price of preferred stock = annual dividend/rate of return
= 6.6/10.25%
= 54.39