McKerley Corp. has preferred stock outstanding that will pay an annual dividend of $5.95 per share with the first dividend exactly 11 years from today. If the required return is 4.05 percent, what is the current price of the stock?
a. $71.15.
b. $120.10.
c. $68.54.
d. $73.86.
e. $124.67.

$94.93

Explanation:

In this question we are asked to calculate the current price of the stock.

To answer the question, we employ a mathematical approach.

The current price of the stock is computed as shown below:

Present value = Future value / (1 + r )^n

where r is the required return and n is the number of years

Future value is calculated as follows:

= Annual dividend / required return

= $ 5.95 / 0.0405

= $146.91 Approximately

So the present value will be:

= $ 146.91/ 1.0405^11

= $94.93 Approximately

forbearance of student loan payments. under forbearance, your loan payments are postponed (or reduced) but interest continues to accrue during the period of forbearance. if you don't pay the interest during that period, the interest may be “capitalized,” which means it is added to your principal balance.