Molen Inc. has an outstanding issue of perpetual preferred stock with an annual dividend of $7.50 per share.

If the required return on this preferred stock is 6.5%, at what price should the stock sell?

Preferred stock price  is $115.38  

Explanation:

stock price =dividend/required rate of return

dividend is $7.50

required rate of return is 6.5%

stock price =$7.50/6.5%

stock price=$7.50/0.065

stock price=$ 115.38  

The most that a rational investor for the preferred stock of Molen Inc is $115.38 as that reflects the dividend earning capacity of the stock upon which investors base their pricing judgement .

Stock price = $115.38  

           Hope this helps! good luck :)

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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