A preferred stock from Duquesne Light Company DQUPRA pays 32

A preferred stock from Duquesne Light Company (DQUPRA) pays $3.20 in annual dividends.

If the required return on the preferred stock is 6.10 percent, what’s the value of the stock? (Round your answer to 2 decimal places.)

Solution

required rate of return = dividend/ value of stock

therefore, value of preferred stock = dividend/ required rate of return

Answer : value of preferred stock = $3.20/6.1% = $52.46