Time left 0:23:08 A preferred stock pays a dividend of $\$ 4.8$. If the required return is $7.8 \%$, what is the value of the stock? Answer:

Step 1 ：The problem is asking for the value of a preferred stock that pays a dividend of $4.8 with a required return of 7.8%.

Step 2 ：The value of a preferred stock can be calculated using the formula for the present value of a perpetuity. A perpetuity is a type of annuity that pays forever.

Step 3 ：The formula for the present value of a perpetuity is: \(PV = D / r\), where: \n- \(PV\) is the present value or price of the stock \n- \(D\) is the annual dividend payment \n- \(r\) is the required rate of return

Step 4 ：In this case, \(D = \$4.8\) and \(r = 7.8\%\) or \(0.078\). We can substitute these values into the formula to find the value of the stock.

Step 5 ：Substituting the given values into the formula, we get: \(PV = 4.8 / 0.078\)

Step 6 ：Calculating the above expression, we get: \(PV = 61.53846153846153\)

Step 7 ：Rounding to two decimal places, the final value of the stock is approximately \$61.54.

Step 8 ：Final Answer: The value of the stock is approximately \(\boxed{\$61.54}\)