You have a share of M Smith Telecommunications preferred sto

You have a share of M. Smith Telecommunication’s preferred stock, which is paying a $4.50 dividend. A fair rate of return on this investment is calculated to be 6.00%. What is the value of this share?

Solution

the value of the share of M. Smith Telecommunication’s preferred stock = 4.50/0.06

the value of the share of M. Smith Telecommunication’s preferred stock = 75.00