value of number of shares
value of equity
value of preferred stock
value of common stock
✅ The correct answer is C.
Preferred dividend is divided for required rate of return to calculate value of preferred stock. The value of a preferred stock equals the present value of its future dividend payments discounted at the required rate of return of the stock. In most cases the preferred stock is perpetual in nature, hence the price of a share of preferred stock equals the periodic dividend divided by the required rate of return.
Preferred dividend is divided for required rate of return to calculate value of preferred stock. The value of a preferred stock equals the present value of its future dividend payments discounted at the required rate of return of the stock. In most cases the preferred stock is perpetual in nature, hence the price of a share of preferred stock equals the periodic dividend divided by the required rate of return.