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Calculate the value of the stock

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Question - The preferred stock of Kencana Holdings is selling for RM25 per share where the dividend rate is 4.5 percent on RM100 par value. The market required yield on similar shares is 7.5 percent.

(i) Compute the value of stock to the investor?

(ii) Compute the expected rate of return of the stock?

(iii) Assume that you have a required rate of return of 12 percent, calculate the value of the stock. Should you purchase the stock?

Reference no: EM133121375

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