Calculate the current market price of the series

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Dartmouth Subsidiaries has three preferred shares issues outstanding. Series A is a perpetual preferred share that has a par value of $35.00 that pays an annual dividend of $3.15. The company's series B preferred shares mature in 8 years and pay a 7 percent annual dividend and have a par value of $75.00. The company's series C preferred shares are participating, mature in 8 years and pay a 7 percent annual dividend and have a par value of $75.00.

a. You observe that the company's series A preferred shares are selling for $33.00 in the market today. Calculate the market rate of return for the company's series A preferred shares. Show your work!

b. The company's series B preferred shares have the same risk as the series A preferred shares and will; therefore, have the same required rate of return. Calculate the current market price of the series B preferred shares. Show your work!

c. The company's series C preferred shares have a participating feature. Series C have the same risk as the series A preferred shares and will; therefore, have the same required rate of return. Management expects growth of 2 percent per year. Calculate the current market price of the series C preferred shares. Show your work!

Reference no: EM132818051

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