Question: 1. (Preferred stock valuation) Calculate the value of a preferred stock that pays a dividend of $6 per share if your required rate of return is 12 percent.
2. (Preferred stock valuation) You are considering an investment in one of two preferred stocks, TCF Capital or TAYC Capital Trust. TCF Capital pays an annual dividend of $2.69, while TAYC Capital pays an annual dividend of $2.44. If your required return is 12 percent, what value would you assign to the stocks?