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8) Natal Corp. has issued some $100 par preferred stock with a dividend of 10% of par value. The required rate of return on the
8) Natal Corp. has issued some $100 par preferred stock with a dividend of 10% of par value. The required rate of return on the preferred stock is 9%.
a) Compute the current value of the preferred stock.
b) If the preferred stock sells in the market at $115 per share, what is the expected rate of return from the preferred stock.
c) If Natal announces that it will redeem the preferred stock in 4 years at a redemption price of $140 per share, compute the rate of return from the preferred stock.
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