Question 8 Mullen Inc has an outstanding issue of perpetual

Question 8 Mullen Inc. has an outstanding issue of perpetual preferred stock what price should the stock sell? with an annual dividend of 2.20 per share. If the required return on this preferred stock is 6.5%, at Your answer should be between 18.12 and 72.80, rounded to 2 decimal places, with no special characters.

Solution

Required return=Annual dividend/Current price

Current price=(2.2/0.065)

which is equal to

=$33.85(Approx).