If a preferred stock from AstraZeneca (AZN) pays $2.73 in annual dividends and the required return...

If a preferred stock from AstraZeneca (AZN) pays $2.73 in annual dividends and the required return is 11 percent, what is the value of the stock?

a.$24.82

b.$19.43

c.$29.42

d.$21.00

Expert Solution

Value of preferred stock:

P0 = D / R

Where,
P₀ = Current value of the stock
D = Annual dividends
R = Required return

Therefore,

P0 = $2.73 / 11%

= $24.82

Therefore, option a.$24.82 is the current answer.

jeff jeffy answered 2 years ago

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