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