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    Stock valuation question: Calculate the maximum amount you would pay for the stock

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    If a share of preferred stock has a $75 par value, the stated dividend is 7% per year, and the required rate of return is 9%, what is the maximum price you should be willing to pay for this preferred stock?

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    https://brainmass.com/business/finance/calculate-maximum-amount-pay-stock-5620

    Solution Preview

    This simplifies into a perpetuity type problem. The dividend on the preferred amounts to $5.25 ($75 ...

    Solution Summary

    The solution explains the theory and makes the simple calculation to solve the problem.

    $2.19

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