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Preferred stock valuation Earley Corporation issued perpetual preferred stock with a 10% annual dividend. The stock currently yields 8%, and its par value is $100.

Preferred stock valuation

Earley Corporation issued perpetual preferred stock with a 10% annual dividend. The stock currently yields 8%, and its par value is $100.

a. What is the stock's value? $

b. Suppose interest rates rise and pull the preferred stock's yield up to 12%. What is its new market value?

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