A company’s series B, 8% preferred stock with a par value of $50 pays quarterly dividends. Its current market value is $35. The shares are retractable (at par) with the retraction date set for three years from today. Similarly rated preferred issues have an estimated nominal required rate of return of 12%. Analysts expect a sustainable growth rate of 4% for the company’s earnings. The instrinsic valye estimate of a share of this preferred issue us closest to?
A. 33.33
B. 45.02
C. 52.00
The answer is B, but i dont understand the calculations. Please explain this. And what is a retractable share?