Voltanis Corp has preferred stock outstanding that will pay

Voltanis Corp. has preferred stock outstanding that will pay an annual dividend of $2.97 every year in perpetuity. If the stock currently sells for $93.55 per share, what is the required return?

2.86%

3.15%

2.97%

3.17%

3.63%

Solution

required return=annual dividend /current price

=(2.97/93.55)

which is equal to

=3.17%(Approx).