Voltanis Corp. has preferred stock outstanding that will pay an annual dividend of $3.99 every year in perpetuity. If the stock currently sells for $99.33 per share, what is the required return

Question

Business

Jazlynn Mccullough

27 July, 23:23

Voltanis Corp. has preferred stock outstanding that will pay an annual dividend of $3.99 every year in perpetuity. If the stock currently sells for $99.33 per share, what is the required return

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Gwendolyn Figueroa · Answer 1

The required rate of return = 4.02% (after rounding off)

Explanation:

Required rate of return means the return on the investment that has been made by the equity shareholders of the company. Rate of return is an important factor to know whether the business organization is performing well or not. The rate of return can be calculated by using the return (profit) that has been made.

Required return is calculated by the below mentioned formula:

Expected dividend per share

Price per share

=3.99/99.33

= 0.040169 or 4.02% (rounded off)