Valuation of Preferred Stocks

V = $6/0.09 =  $66.67

The above calculation assumes that the preferred stock has indefinite maturity.

Let’s say that stock has a maturity of 2 years. The value will now be calculated as follows:

V = $6/(1.09) + $6/(1.09)^2 + $100/(1.09)^2 = $94.72

The above calculations are for a plain vanilla preferred stock. Some preferred stocks have features such as convertible, callable, etc. With those features, the valuation will need to be adjusted according to the price of these features.