EXAMPLE

Consider another preferred stock that has a finite life of $50$ years $($a sinking fund preferred issue$),$

a $$100$ par value, and a $$10$ annual dividend. The required return is $8\%.$ If the par value is repaid

at maturity in $50$ years, what is the price of the stock?

What would its value be if the required return declined to $6\%?$

Had this been a perpetual preferred with a required return of $6\%,$ what would be the stock price?:

Price