Answered

Welcome to Westonci.ca, your one-stop destination for finding answers to all your questions. Join our expert community now! Experience the convenience of getting accurate answers to your questions from a dedicated community of professionals. Discover detailed answers to your questions from a wide network of experts on our comprehensive Q&A platform.

Timeless Corporation issued preferred stock with a par value of $600. The stock promised to pay an annual dividend equal to 20.0% of the par value. If the appropriate discount rate for this stock is 13.0%, what is the value of the stock

Sagot :

abiolataiwo2015

Answer:

$923.08

Explanation:

Calculation to determine the value of stock

Annual Dividend = 20%*600 = D = 120

Discount rate = r = 13% = 0.13

Value of the preferred stock can be calculated using the perpetuity formula:

Value of the dividend = P = D/r = 120/0.13 = $923.08

Therefore the value of stock is $923.08

Thank you for visiting. Our goal is to provide the most accurate answers for all your informational needs. Come back soon. Thanks for using our service. We're always here to provide accurate and up-to-date answers to all your queries. Westonci.ca is here to provide the answers you seek. Return often for more expert solutions.