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The preferred stock of General Motors pays an annual dividend of $1 forever. The appropriate discount...

The preferred stock of General Motors pays an annual dividend of $1 forever. The appropriate discount rate is 8% per year.

What is the present value of the preferred stock?

Solutions

Expert Solution

Present value of perpetual preferred stock = Annual dividend/Discount Rate

PV = $1/8%

PV = $12.50

jeff jeffy answered 2 years ago
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