Infinity Inc

question 99

Multiple Choice

Infinity Inc.has 750,000 preferred shares outstanding,which pay a dividend rate of 5.25 percent.Currently,the market value of these preferred shares is $22.5 million and the short-term government T-bills yield is 5 percent.What is the par value of these shares if investors require a risk premium of 3.75 percent?

• A) $7.14
• B) $18.00
• C) $30.00
• D) $50.00

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