FIRST PRINCIPLES OF VALUATION

JBS Corp. wants to sell preferred shares at $100/share. A similar issue from another company is priced at $60 and pays $5 annual dividend. What dividend must JBS Corp. pay to get their price of $100? $60 = $5/r, so r = 0.0833, which is what JBS preferred stock will have to yield. ($100)(0.0833) = $8.33 as the annual dividend. II. VALUING STOCKS ... ................
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