Preferred stocks

timer Asked: Apr 13th, 2017

Question description

JKL preferred stocks have the par value of $90 and pay dividend of 9%. Currently the

market trades JKL’s preferred stock at a required return of 12.5%. JKL’s marginal tax rate is

20%. If there are 2,000,000 of preferred shares outstanding traded in the market, how much

money does JKL need to retire all of these preferred shares?

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