Fifth National Bank just issued some new preferred stock. The issue will pay an annual dividend of

Question:

Fifth National Bank just issued some new preferred stock. The issue will pay an annual of $8 in perpetuity, beginning five years from now. If the market requires a return of 5.6 percent on this investment, how much does a share of preferred stock cost today?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...