Determine the value of a share of DuPont Series A $4.50 cumulative preferred stock, no par, to an investor who requies a 9 percent rate of return on this security. The issue is callable at $120 per share plus accrued dividens. However, the issue is not expected to be called at any time in the foreseeable future.
P0 = Dp/kp
Dp = $4.50; kp = 0.09
P0 = $4.50/0.09 = $50