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Nick’s Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $5 at the end of each year Answer

Nick’s Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $5 at the end of each year. The preferred sells for $50 a share. What is the stock’s required rate of return?

 

Ans:

  

Stock’s required rate of return = Dps / Vps

 Stock’s required rate of return = 5/50 = 10 %