Acme Manufacturing Corporation pays an annual dividend rate of 11.40% on its preferred stock that currently returns 15.28% and has a par value of $100.00 per share. What is the value of Acme’s preferred stock?

The value of Acme’s preferred stock is $74.61

Explanation:

Dividend = 11.40% * $100

Dividend = $11 .40

Return =  

Value of stock = Dividend / Return

Value of preferred stock = $11.40 / 15.28%

Value of preferred stock = $74.60732

Value of preferred stock = $74.61

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