Determine the value of a share of DuPont Series A $4.50 cumulative preferred stock, no par, to an investor who requies a 9 percent rate of return on this security. The issue is callable at $120 per share plus accrued dividens. However, the issue is not expected to be called at any time in the foreseeable future.

User Icon for Teresa Teresa answered
13 years ago

P0 = Dp/kp

Dp = $4.50; kp = 0.09
P0 = $4.50/0.09 = $50