1. A preferred stock is currently valued at $49 a share and pays an annual divid

Question

1. A preferred stock is currently valued at $49 a share and pays an annual dividend of $4. The par value is $100 per share. What is the rate of return on this security?

2. Over the past 38 years your parents saved money each month for their retirement. They retired this week and expect to live another 34 years. Their investment account is currently valued at $286,800 and is expected to return 6.5 percent annually in the future. How much money can they withdraw annually if they wish to spend all of their money during their lifetime?

Explanation / Answer

2)i = ptr/100
so total intrest for 34 years is 633828
so total amount they get to spend for 34 years is p + i = 920628
so for annually they get to spend is 920328/34 = 27077.3

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