Taylor Inc. has preferred perpetual stock outstanding that has a par value of $100 per share and a dividend yield of 9.4% of stated value. If the appropriate interest rate for Taylor’s preferred stock is 8.3%, how much is each share of preferred stock worth?

Figured it out:

dividend yield x par value divided by interest rate

.094*100/.083 = $113.25

To calculate the value of each share of preferred stock, we can use the dividend discount model (DDM) formula. The DDM formula for the value of a perpetual preferred stock is:

Value = Dividend / Interest Rate

In this case, the dividend is given as a percentage (9.4% of stated value) and the interest rate is also given as a percentage (8.3%). We need to convert these percentages into decimal form before plugging them into the formula.

Step 1: Convert the dividend yield and interest rate into decimal form:
Dividend yield = 9.4% / 100% = 0.094
Interest rate = 8.3% / 100% = 0.083

Step 2: Plug the values into the DDM formula:
Value = Dividend / Interest Rate
Value = 0.094 / 0.083

Step 3: Calculate the value:
Value = 1.132

Therefore, each share of Taylor Inc.'s preferred perpetual stock is worth $1.132 (rounding to three decimal places).