Answer:
$81.88
Explanation:
We need to first calculate the terminal value which is the value in perpetuity for this preferred stock as shown below:
terminal value of the dividend =dividend/required rate of return
dividend is $5.65
required rate of return is 3.99%
terminal value of dividend=$5.65/3.99%=$ 141.60
The preferred stock price is the present value of the dividend's terminal value value
Present value=terminal value/(1+r)^n
r is the rate of return of 3.99%
n is the of years involved which is 14,15 years from today means the end of the 14th year
present value=$141.60/(1+3.99%)^14=$81.88
