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Valuing Preferred Stock

Suppose you are considering investing in a preferred stock with a stated value (stated_value) of $25, dividend rate (div_rate) of 5%, and cost of preferred equity (kp) of 10%. The cost of preferred equity is the rate used to discount cash flows generated by the preferred stock. Assuming that the growth rate of the preferred dividends is zero, what is the value of the preferred stock?

Note: The variables stated value, div_rate, and kp are stored in memory.

Cet exercice fait partie du cours

Equity Valuation in R

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Instructions

  • Calculate the amount of preferred dividends.
  • Calculate the value of the preferred stock assuming no growth in preferred dividends.

Exercice interactif pratique

Essayez cet exercice en complétant cet exemple de code.

# Calculate dividend of preferred stock
div <- ___
div

# Calculate value of preferred stock
pref_value <- ___
pref_value
Modifier et exécuter le code