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Homework answers / question archive / Graphical Designs is offering 5-5 preferred stock
Graphical Designs is offering 5-5 preferred stock. The stock will pay an annual dividend of $5 with the first dividend payment occurring 5 years from today. The required return on this stock is 4.95 percent. What is the price of the stock today? Multiple Choice O $77.46 $75.59 O $79.33 $83.26 O $101.01
First dividend is paid in 5th year = $5
Price of the preferred stock is present value of cash inflows of the stock
Price of the stock = [5 / (1.0495)5] + [(5/0.0495) / (1.0495)5]
Price of the stock = 83.26
So price of the stock today is $83.26
