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Homework answers / question archive / Smiling Elephant Inc
Smiling Elephant Inc., has an issue of preferred stock outsMnding that pays a $5.30 dividend every year, in perpetuity.
If this issue currently sells for $8025 per share, what is the required return? (Do nit round intermedia. calcul.ons a. enter your answer as a percent round. W 2 decimal places, e.g., MAO.)
r 1%
Computation of Required Rate of Return:
Required Rate of Return = Annual Dividend/Current Share Price
= $5.30/$80.25
Required Rate of Return = 6.60%
