Preferred Products has issued preferred stock with an $8 annual dividend that will be paid in perpetuity.
a. If the discount rate is 12%, at what price should the preferred sell?
b. At what price should the stock sell 1 year from now?
c. What is the dividend yield, the capital gains yield, and the expected rate of return of the stock?
Annual dividend ........$8.00
Discount rate .......... 12%