Preferred Stock valuation A preferred stock can usually be valued like a perpetuity:
Preferred Stock Valuation • A preferred stock can usually be valued like a perpetuity:
Preferred Stock valuation A preferred stock can usually be valued like a perpetuity: D ps ps
Preferred Stock Valuation • A preferred stock can usually be valued like a perpetuity: V = D k ps ps
Example: Xerox preferred pays an 8.25%0 dividend on a s50 par value Suppose our required rate of return on Xerox preferred is 9.5%
Example: • Xerox preferred pays an 8.25% dividend on a $50 par value. • Suppose our required rate of return on Xerox preferred is 9.5%
Example: Xerox preferred pays an 8.25%0 dividend on a s50 par value Suppose our required rate of return on Xerox preferred is 9.5%. 4.125 ps一 095
Example: • Xerox preferred pays an 8.25% dividend on a $50 par value. • Suppose our required rate of return on Xerox preferred is 9.5%. Vps = 4.125 .095 =
Example: Xerox preferred pays an 8.25%0 dividend on a s50 par value Suppose our required rate of return on Xerox preferred is 9.5%. 4.125 ps一 43.42 095
Example: • Xerox preferred pays an 8.25% dividend on a $50 par value. • Suppose our required rate of return on Xerox preferred is 9.5%. Vps = 4.125 .095 = $43.42