The intrinsic value (Vo) of a non-callable, non-convertible preferred stock is calculated using the formula:

$Vo = \frac{D_o}{r}$

where:

• $D_o$ is the annual dividend, calculated as the par value multiplied by the dividend rate: $D_o = 25 \times 0.05 = 1.25$.
• $r$ is the required rate of return: 4% or 0.04.

Substituting the values:

$Vo = \frac{1.25}{0.04} = 31.25$

Thus, the intrinsic value is closest to $31.25 (Option C).

Incorrect Options:

• A ($25.25): Incorrectly adds the difference between the dividend rate and required return to the par value.
• B ($26.00): Incorrectly multiplies the par value by the required return.