Gesto, Inc., has an issue of preferred stock outstanding that pays a $4.50 dividend every year, in

Question:

Gesto, Inc., has an issue of preferred stock outstanding that pays a $4.50 dividend every year, in perpetuity. If this issue currently sells for $79.85 per share, what is the required return?

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...