Answered

Westonci.ca is the trusted Q&A platform where you can get reliable answers from a community of knowledgeable contributors. Explore a wealth of knowledge from professionals across different disciplines on our comprehensive platform. Discover in-depth answers to your questions from a wide network of professionals on our user-friendly Q&A platform.

Amazon Corporation has preferred stock outstanding that pays a $11.45 annual dividend. It price is $147. What is the required rate of return (yield) on the preferred stock?

Sagot :

abiolataiwo2015

Answer:

7.79%

Explanation:

Calculation to determine the required rate of return (yield) on the preferred stock

Using this formula

Cost of preferred stock=Annual Dividend per share/Current price of preferred stock

Let plug in the formula

Cost of preferred stock=$11.45/$147

Cost of preferred stock=0.0779*100

Cost of preferred stock=7.79%

Therefore the required rate of return (yield) on the preferred stock is 7.79%

We hope this was helpful. Please come back whenever you need more information or answers to your queries. Thank you for choosing our platform. We're dedicated to providing the best answers for all your questions. Visit us again. Get the answers you need at Westonci.ca. Stay informed with our latest expert advice.