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What would new estimated value of rolen preferred stock

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Problem - Several years ago, Rolen Riders issued preferred stock with a stated annual dividend of 10% of its $100 par value. Preferred stock of this type currently yields 8%. Assume dividends are paid annually.

Required -

a. What is the estimated value of Rolen's preferred stock?

b. Suppose interest rate levels have risen to the point where the preferred stock now yields 12%. What would be the new estimated value of Rolen's preferred stock?

Reference no: EM132727775

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