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28-10-2020
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Farley Inc. has perpetual preferred stock outstanding that sells for $50 a share and pays a dividend of $5.00 at the end of each year. What is the required rate of return? Round your answer to two decimal places.

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adnansoomro2019 adnansoomro2019

29-10-2020

Answer:

10%

Explanation:

The Required Rate of return is the minimum acceptable return on investment sought by individuals or companies considering an investment opportunity.

Dividend = $5

Market price = $50

Required rate of return = Dividend / Market price

Required rate of return = 5/50*100

Required rate of return = 10%

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