Insert Function AutoSum Recently Financial Logical Used Text Date & Lookup & Math & Time Reference Trig More Functions 0 Create from Selection B G H K L M 2 3 6 7 M8 x fx D E F J 1 P10-17 Modified (see problem below) a. What is the value of a preferred stock where the dividend rate is 70 percent on a $50 par value, and the market's required yield on similar shares is 8.0 percent? b. Should you acquire the stock if the current market price is $40.00/share? 5 c. If you purchase the stock for the value $40/share what is your expected rate of return? (Hint use the "market's required yield" for preferred stock formula: Rate of retum Dividend on preferred stock/the price of a share of preferred stock) 8 9 Hint: See section 10.3 10 11 Preferred Stock Valuation and Expected Rate of Return 12 13 Par value 14 Current market price 15 Dividend rate 16 Dividend dollars calc 17 Required Rate of Return 18 19 A) 20 Value see page 317, equation 10-6 21 22 B) 24 25 Expected rate of return 26 27 29 30 31 33 08-1 08-9 P8-14M P8-18M 8-27 010-4 Q10-8 P10.2M DILAN