Kozhin planning to invest in ABC companys share, but she is not sure whether she should buy
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Question:
Kozhin planning to invest in ABC company’s share, but she is not sure whether she should buy preferred stock or common stock.
Preferred stock is currently trading at $90 per share and has 9% dividend annually (on $100 par value) while common stock currently trading at $80 per share and just paid dividend of $5, and dividend expect grow at 3% rate for foreseeable future.
What rate of return Kozhin will get if she invest in preferred stock and common stock?
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
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