3. Preferred Stock. Preferred Products has issued preferred stock with
an $8 annual dividend that will be paid in perpetuity.

a. If the discount rate is 12 percent, 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?

Prefered "Stock" cannot be valued on the dividend stream alone. The
price of the stock would vary based on the financial condition on the
company that issues the prefered stock.

Hope this helps.

I am not sure if I am correct

a.  P0 = Div1/r						
          = 8/.12						
          =  66.66						
b.   P0 = Div1/r-g						
           = 8/.12-0						
           = 66.66						
c.    r = [Div1/P0] + g						
         = [8/66.66 ] +0						
         = 12% dividend yield						
Because ther is no change in stock price, there is not capital gain.