Answered

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Bedeker, Inc., has an issue of preferred stock outstanding that pays a $4.95 dividend every year in perpetuity. If this issue currently sells for $94 per share, what is the required return

Sagot :

Answer:

Required return = 5.27%

Explanation:

Below is the calculation of required return:

Given the dividend paid amount = $4.95

The selling price of share = $94

Use below formula to find the required return:

Required return = Dividend amount / Selling price

Now plug the values:

Required return = $4.95 / 94

Required return = 5.27%

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