A Firm Has Issued $5 Par Value Preferred Stock That

question 70

Multiple Choice

A firm has issued $5 par value preferred stock that pays a $0.80 annual dividend.The stock currently sells for $9.50.In calculating WACC, what should one use for the value of the firm's preferred stock?

• A)$0.80
• B)$4.20
• C)$5
• D)$9.50

---

Definitions:

Required Assets

Assets that are necessary for a business or individual to achieve its goals, including tangible and intangible resources.

Long-Term Assets

Assets that will not be converted into cash within one year.

Patents

Legal documents granted by governments giving inventors exclusive rights to their inventions, preventing others from making, using, or selling the invention without permission for a certain period.

Short-Term Assets

Assets that will be converted into cash within one year.