What is the value of the preferred stock

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Reference no: EM131985076

Similar to characteristics of a bond, preferred stocks pays a fixed dividend of its face value and therefore has no dividend growth rate.

On the other hand, similar to stocks preferred stocks have perpetual life. A firm has an issue of preferred stock outstanding that has a stated annual dividend of $4.

The required return on the preferred stock has been estimated to be 16%. What is the value of the preferred stock?

Reference no: EM131985076

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