Answered

Casino Games Company preferred stock pays a perpetual annual dividend of 3.5% of its $100 par value. If investors' required rate of return on this stock is 11%, what is the value per share

Answer :

Answer:

$314.29

Explanation:

Data provided in the question

Annual dividend = 3.5%

Par value = $100

Required rate of the return on this stock = 11%

So, the value per share is

Par value = (Required rate of the return on this stock × value per share) ÷ (annual dividend)

$100 = (11% × value per share) ÷ (Annual dividend)

So, the value per share is $314.29

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