7. Problem 9.09 (preferred stock returns)

Avondale aeronautics has perpetual preferred stock outstanding with a par value of $100. The stock pays a quarterly dividend of two dollars and its current price is $89.

a. what is its nominal annual rate of return? Do not round intermediate calculations. Round your answer to two decimal places.

? %

b. what is its effective annual rate of return? Do not round intermediate calculations. Round your answer to two decimal places.

? %