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    Finance: Steps on a TI BA II Plus to calculate EMC's preferred stock required ROR

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    Walk me through the steps to do this on a TI BA II Plus and the rationale.

    EMC has preferred stock outstanding which pays a dividend of $5.00 at the end of each year.
    This stock was issued in perpetuity and has no maturity date. EMC's preferred stock sells for $60 per share. (Pr. 10-4).

    Calculate this preferred stock's required rate of return

    Please show all work.

    © BrainMass Inc. brainmass.com March 4, 2021, 5:46 pm ad1c9bdddf
    https://brainmass.com/business/finance/calculating-preferred-stock-rate-return-10329

    Solution Preview

    Assume the next dividend is a year from now.

    The perpetuity formula is Dividend/Required return = Stock price.

    5/X = 60

    X, the required return is 8.3333 ...

    Solution Summary

    The solution shows the steps for the financial calculator plus it explains and solved the problem.

    $2.19

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