Big Oil, Inc. has a preferred stock outstanding that pays a $7 annual dividend. If investors’...

Big Oil, Inc. has a preferred stock outstanding that pays a $7 annual dividend. If investors’ required rate of return is 10 percent, what is the market value of the shares? Round your answer to the nearest cent. $ If the required return declines to 7 percent, what is the change in the price of the stock? Round your answer to the nearest cent. The price -Select- by $ .

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Expert Solution

AT 10% RETURN
market value of the shares =	Dividend / Required return
	7 / 10%
	70.00

AT 7% RETURN
market value of the shares =	Dividend / Required return
	7 / 7%
	100.00

CHANGE =	100 - 70
	$30.00

jeff jeffy answered 2 years ago

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