Problem:
Your firm has preferred stock outstanding that pays a current dividend of $4.50 per year and has a current price of $59.30. You anticipate that the economy will grow steadily at a rate of 2% per year for the foreseeable future.
Required:
Question: What is the market required rate of return on your firm's preferred stock?
- 7.59%
- 7.74%
- 9.74%
- There is not enough information to answer
Note: Please answer in proper manner and show all computations