Wernam Hogg Class A preferred shares have a par value of $100 and offer an annual dividend at 0.8% of par value. Wernham Hogg is experiencing cash flow problems due to poor market conditions in the commercial paper business
The company has suspended dividends on the Class A preferred shares. Analysts do not expect the dividends to resume for another 3 years, at which point they are expected to resume in perpetuity. If investors require a return of 2.25%, then what is the fair price for the preferred shares today?
A) $34.01
B) $34.77
C) $35.56
D) $96.65
E) $340.08
A
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"Enclosure" notation at the bottom of the page
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What will be an ideal response?