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Kozhin planning to invest in ABC companys share, but she is not sure whether she should buy preferred stock or common stock. Preferred stock is

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?


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