A Preferred Stock Will Pay a Dividend of $7

Multiple Choice

A preferred stock will pay a dividend of $7.50 in the upcoming year and every year thereafter; i.e., dividends are not expected to grow. You require a return of 10% on this stock. Use the constant growth DDM to calculate the intrinsic value of this preferred stock.

A) $0.75
B) $7.50
C) $64.12
D) $56.25
E) None of the options are correct.