Ajax Company Has Issued Perpetual Preferred Stock with a Par

question 50

Multiple Choice

Ajax Company has issued perpetual preferred stock with a par of $100 and a dividend of 5.5 percent. If the required rate of return is 7.75 percent, what is the stock's current market price? (Round off to the two decimal places.)

• A) $12.90
• B) $70.97
• C) $53.27
• D) $62.14

---

Definitions:

Maturity

The stage of the organization when the business is considered well established.

Inventory

A company's stock of goods or materials, which are held for the purpose of resale or in the production process.

Loan

A sum of money that is borrowed, which must be paid back with interest.

Cash Flows

The total amount of money being transferred into and out of a business, affecting the organization's liquidity, financial health, and operational capabilities.