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 [tex]=face\ value\times dividend\ rate=100\times 0.14=14[/tex]
We have to find the value of preferred stock
Value of preferred stock [tex]=\frac{preferred\ stock\ dividend}{discount\ rate}=\frac{14}{0.1}=140[/tex]
So value of preferred stock will be $140
