What is the market value of the outstanding preferred stock

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Reference no: EM13763914

Jones Design wishes to estimate the value of its out-standing preferred stock. The preferred issue has an $80 par value and has a dividend rate of 8 percent. Similar-risk preferred stocks are currently earning a 12% annual rate of return.

Required:

a. What is the market value of the outstanding preferred stock?

b. Explain why the current market value is different from the par value.

Reference no: EM13763914

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