$10-8$: Preferred Stock

Preferred stock valuation

Ezzell Corporation issued perpetual preferred stock with a $10\%$ annual dividend. The stock currently yields $7\%,$ and its par value is $$100.$

a$.$ What is the stock's value? Round your answer to two decimal places.

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b$.$ Suppose interest rates rise and pull the preferred stock's yield up to $12\%.$ What would be its new market value? Round your answer to two decimal places.

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