Bedford Mattress Company issued preferred stock many years ago. It carries a fixed dividend of $8 per

Question:

Bedford Mattress Company issued preferred stock many years ago. It carries a fixed dividend of $8 per share. With the passage of time, yields have gone down from the original 8 percent to 6 percent (yield is the same as required rate of return).

a. What was the original issue price?

b. What is the current value of this preferred stock? Discuss.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...