Ransom Industries Inc, has issued preferred stock that pays $3.00 dividends annually. If the market requires a 12.5% rate of return on the shares, what is the current price of the firm's preferred shares?
A) $21.33
B) $24.00
C) $41.67
D) There is not enough information to answer this question.
B
Explanation: B) Price = Div/rate = $3/.125 = $24.00.
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