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Soap Inc.'s $100 par value preferred stock pays a dividend fixed at 5% of par. To...

Soap Inc.'s $100 par value preferred stock pays a dividend fixed at 5% of par. To earn 10% on an investment in this stock, you need to purchase the shares at a per share price of?

$80.0

$62.5

$50.0

$75.7

Solutions

Expert Solution

Annual dividend=100*5%

=$5

Hence price of stock=Annual dividend/Rate of return

=5/0.1

which is equal to

=$50

jeff jeffy answered 2 years ago
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