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OLga [1]
2 years ago
8

What is the value of a preferred stock where the dividend rate is 14% on a $100 par value? Assume the discount rate for this sto

ck is 12%?
Business
1 answer:
Ulleksa [173]2 years ago
8 0

Answer:

Value of preferred stock will be $140

Explanation:

We have given par value of preferred stock = $100

Dividend rate = 14 %

Discount rate on preferred stock = 12%

Preferred stock dividend =face\ value\times dividend\ rate=100\times 0.14=14

We have to find the value of preferred stock

Value of preferred stock =\frac{preferred\ stock\ dividend}{discount\ rate}=\frac{14}{0.1}=140

So value of preferred stock will be $140

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