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March 29, 2017

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The First Bank of Ellicott City has issued perpetual preferred stock with a $100 par value. The bank pays a quarterly dividend of $1.65 on this stock. What is the current price of this preferred stock given a required rate of return of 13.0 percent?

  • finance - ,

    .13p = 1.65
    .13p/.13 = 1.65/.13
    P = 12.69

  • finance - ,

    First not correct
    4(1.65)/.13
    6.60/.13
    = $50.77

  • finance - ,

    4(1.65)/.13
    6.60/.13
    = $50.77

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