document.write( "Question 72880: Style Corporation preferred stock pays a dividen of $3.15 a year. What is the value of the stock if the required rate of return is 8.5%? (Round your answer to the nearest $1)
\n" ); document.write( "
\n" ); document.write( "A. $23
\n" ); document.write( "B. $27
\n" ); document.write( "C. $33
\n" ); document.write( "D. $37
\n" ); document.write( " \n" ); document.write( "

Algebra.Com's Answer #52347 by bucky(2189) $\"\"$ $\"About$

You can put this solution on YOUR website!
Each year you can expect that 8.5% of the amount you have invested will be returned to
\n" ); document.write( "you in the form of a dividend. (8.5% converts to 0.085 in decimal)
\n" ); document.write( ".
\n" ); document.write( "8.5% of the amount invested in a share of stock comes to $3.15 annually. Write this in equation
\n" ); document.write( "form:
\n" ); document.write( ".
\n" ); document.write( "0.085*A = $3.15
\n" ); document.write( ".
\n" ); document.write( "Divide both sides by 0.085 and you get:
\n" ); document.write( ".
\n" ); document.write( "A = $3.15/0.085 = $37.06 (rounded to the nearest cent).
\n" ); document.write( ".
\n" ); document.write( "From your list of answers, $37.00 is the closest answer.
\n" ); document.write( ".
\n" ); document.write( "Hope this helps you to understand the workings of interest and dividends based on the amount
\n" ); document.write( "you invest. \n" ); document.write( "

\n" );