Preferred Stock
Preferred Stock Valuation
Several years ago, Rolen Riders issued preferred stock with a stated annual dividend of 12% of its $100 par value. Preferred stock of this type currently yields 10%. Assume dividends are paid annually.
What is the estimated value of Rolen's preferred stock? Round your answer to the nearest cent. $
Suppose interest rate levels have risen to the point where the preferred stock now yields 13%. What would be the new estimated value of Rolen's preferred stock? Round your answer to the nearest cent. $