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The First Bank of Ellicott City has issued perpetual preferred stock

The First Bank of Ellicott City has issued perpetual preferred stock with a $100 par value. The bank pays a quarterly dividend of $1.65 on this stock. What is the current price of this preferred stock given a required rate of return of 12.5 percent?

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See the attached file. Thanks

VALUATION OF A PREFERRED STOCK
The First Bank of Ellicott City has issued perpetual preferred stock with a $100 par value. The bank pays a quarterly ...

Solution Summary

Shows how to calculate the value of a preference stock

$2.19