LTM, Inc. has an issue of preferred stock whose par value is $100. The preferred stock pays a 4.5% dividend. If investors require a 4% rate of return for these shares, what price should the preferred stock sell for?

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter8: Basic Stock Valuation
Section: Chapter Questions
Problem 21MC
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What price should the preferred stock sell for these accounting question?

LTM, Inc. has an issue of preferred stock whose par value is $100.
The preferred stock pays a 4.5% dividend. If investors require a 4%
rate of return for these shares, what price should the preferred stock
sell for?
Transcribed Image Text:LTM, Inc. has an issue of preferred stock whose par value is $100. The preferred stock pays a 4.5% dividend. If investors require a 4% rate of return for these shares, what price should the preferred stock sell for?
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