A firm earns $895 million in profits and pays $626 million in dividends for the year. The firm has 135 million shares of preferred stock and 390 million shares of common stock. The preferred stock is guaranteed a dividend of $1.30 per yer and costs $32 per share. The common stock costs $29 per share. What is the dividend per share for the common stock?

A firm earns $895 million in profits and pays $626 million in dividends for the year. The firm has 135 million shares of preferred stock and 390 million shares of common stock. The preferred stock is guaranteed a dividend of $1.30 per yer and costs $32 per share. The common stock costs $29 per share. What is the dividend per share for the common stock?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The preferred stock of Rock Bottom Floors pays a fixed dividend of $7.50 annually. Each share of this stock is selling for $58.05 a share. What is the firm's cost of preferred stock if the tax rate is 35 percent and the par value per share is $100?
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