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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.

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    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

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