Kindzi Company has preferred stock outstanding that is expected to pay an annual dividend of $4.88 every year in perpetuity. If the required return is 4.69 percent, what is the current stock price?



The price of a preferred stock that pays a constant dividend in perpetuity can be calculated using the following formula:

\[
\text{Price} = \frac{\text{Dividend}}{\text{Required Return}}
\]

Where:
- **Dividend** is the annual dividend payment.
- **Required Return** is the required rate of return (as a decimal).

In this case:
- **Dividend** = $4.88
- **Required Return** = 4.69% = 0.0469

Now, we can plug in the values:

\[
\text{Price} = \frac{4.88}{0.0469} = 104.06
\]

Thus, the current stock price is **$104.06**.

Would you like more details or have any questions?

### Related Questions:
1. What factors influence the required return on a stock?
2. How does a change in the required return affect the stock price?
3. What is the difference between preferred and common stock?
4. How would the stock price change if the dividend were to increase?
5. What are the tax implications of receiving preferred stock dividends?

### Tip:
When the required return decreases, the stock price increases if the dividend remains the same.

Kindzi Company has preferred stock outstanding that is expected to pay an annual dividend of $4.88 every year in perpetuity. If the required return is 4.69 percent, what is the current stock price?

Learn how to calculate the current price of Kindzi Company's preferred stock that pays a perpetual annual dividend of $4.88, with a required return of 4.69%. This problem involves the perpetuity valuation formula and is suitable for finance students at the undergraduate level.

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