Derive price of the preferred stock

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Reference no: EM131861306

There is a 6% yield preferred stock which is callable at 104 after 2 years. Its dividend is $4 per annum. If the firm does not buy the asset, it loses its right to call it back at the 5th year. Derive the price of the preferred stock in the 2 cases where it is callable and in 5 years when it becomes non-callable. Show your work and the formula used to get the two prices.

Reference no: EM131861306

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