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Farley Inc. has perpetual preferred stock outstanding that sells for a share and pays a dividend of at the end of each year. What is the required rate of return? Round your answer to two decimal places.
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Q. Farley Inc. has perpetual preferred stock outstanding that sells for a share and pays a dividend of at the end of each year. What is the required rate of return? Round your answer to two decimal places.
- Calculate Required Rate: The required rate of return for a perpetual preferred stock can be calculated using the formula:Required Rate of Return = Annual Dividend / Price per ShareWe have:Annual Dividend = Price per Share = Now, let's calculate the required rate of return.
- Use Formula: Using the formula:Required Rate of Return =
- Perform Division: Performing the division to find the required rate of return: Required Rate of Return =
- Convert to Percentage: To express the required rate of return as a percentage and round it to two decimal places: Required Rate of Return =
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