Out-of-sight telecommunications has a preferred stock outstanding with a par value of $40 per share that pays

Question:

Out-of-sight telecommunications has a preferred stock outstanding with a par value of $40 per share that pays an annual dividend equal to 5 percent.

(a) If investors who purchase similar investments require a 10 percent return, what is the market value of OST`s preferred stock?

(b) What would be the market value of the stock if investors require an 8 percent return?

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... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...