Answer:
The price of the preferred stock today is $103.27
Explanation:
The preferred stock pays a constant dividend after equal intervals of time and has an indefinite maturity. Thus, a preferred stock is just like a perpetuity. The value or price of a perpetuity can be calculated using the following formula.
The price or a perpetuity:
P = Cash Flow / r
As the cash flow in this case is dividends so we will use dividends in place of cash flow and divide by the required rate of return.
P = 4.74 / 0.0459
P = $103.267 rounded off to $103.27
