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ABC Inc. has an outstanding issue of perpetual preferred stock with an annual dividend of $8.00 per share. If the required return on this preferred
- ABC Inc. has an outstanding issue of perpetual preferred stock with an annual dividend of $8.00 per share. If the required return on this preferred stock is 5%, at what price should the stock sell? 6. Assume D0 = $2.00, g (which is constant) = 4%, and the current stock price, P0 = $40, what is the stocks expected dividend yield for the coming year? Hint: Dividend Yield = D1/P0. So, compute D1 and proceed from there.
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