A preferred stock from Quantum Dynamics Corp. (QDC-K) pays $3.00 in annual dividends.

If the required rate of return on the preferred stock is 6.1 percent, what is the fair present value of the stock?

To find the fair present value (price) of the preferred stock, we can use the formula for valuing preferred stock:

\[
P_0 = \frac{D}{r}
\]

Where:
- $ P_0 $ is the price of the preferred stock.
- $ D $ is the annual dividend paid by the stock.
- $ r $ is the required rate of return (expressed as a decimal).

Given:
- Annual Dividend $ D = 3.00 $ dollars.
- Required rate of return $ r = 6.1\% = 0.061 $.

Now, plug the values into the formula:

\[
P_0 = \frac{3.00}{0.061} = 49.18
\]

Thus, the fair present value of the stock is **$49.18**.

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### Related Questions:
1. How does the price of preferred stock change with different required rates of return?
2. What factors influence the required rate of return on preferred stock?
3. How does the price of preferred stock compare to common stock?
4. What is the impact of inflation on the value of preferred stock?
5. How do callable preferred stocks affect their valuation?

### Tip:
The price of preferred stock is inversely related to the required rate of return—the higher the rate, the lower the stock price.

A preferred stock from Quantum Dynamics Corp. (QDC-K) pays $3.00 in annual dividends. If the required rate of return on the preferred stock is 6.1 percent, what is the fair present value of the stock?

Discover how to calculate the fair present value of Quantum Dynamics Corp.'s preferred stock (QDC-K) that pays $3.00 in annual dividends with a required rate of return of 6.1%. The solution involves key financial concepts and stock valuation formulas. Ideal for finance students in Grades 11-12 or undergraduate finance courses.

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