Final answer:
The student's question pertains to calculating the price of preferred stock using the dividend discount model, which requires the next dividend amount to determine the price. Without the dividend information, the calculation cannot be completed, and none of the provided answers can be confirmed as correct.
The correct option is not given.
Step-by-step explanation:
The question concerns the valuation of preferred stock using the Dividend Discount Model (DDM), which is a method used in finance to determine the price of a stock based on the expected dividends and the discount rate. The formula for the price of a preferred stock, which typically pays a constant dividend, is given by the DDM as Price = Dividend / Required Rate of Return.
In this case, we need additional information such as the amount of the next dividend to compute the price of TXS preferred stock. Without this dividend amount, the given options cannot be evaluated. It is important to consider the time value of money when evaluating such investment opportunities, which reflects the preference of receiving money today rather than in the future because of its potential earning capacity.
Considering the concept of the time value of money, an investor would calculate the present value of expected dividends for Babble, Inc., which involves calculating the present value (PV) or present discounted value (PDV) for future profits and then dividing by the number of shares to obtain the price per share.
For example, if Babble, Inc. is expected to distribute $60 million in dividends over the next two years and has 200 shares, an investor might calculate the PDV for each expected dividend and sum them up to get the total PDV, which is then divided by the number of shares to obtain the price per share.
The correct option is not given.