Present Value of Preference Shares

15th February 2020 0 By indiafreenotes

Preference shares give a fixed rate of dividend but without a maturity date. Preference shares are usually perpetuities but sometimes they do have maturity dates also.

The value of a preference share as a perpetuity is calculated thus:

V = D/i

V = Value of Preference Share

D = Annual Dividend per Preference Share

i = Discount Rate on Preference Shares