Compare the After-Tax Returns for a Corporation That Invests in Preferred

Compare the after-tax returns for a corporation that invests in preferred stock with a 12% dividend versus a common stock with no dividend but a 16% capital gain.The corporation's tax rate is 35%.The:

A) Common stock returns 2.60% more than preferred
B) Preferred stock returns 0.34% more than common
C) Common stock returns 2.32% more than preferred
D) Returns are equal on an after-tax basis After-tax returns:
Preferred Stock: 12% - (12% x 35% x 30%) = 10.74%
Common Stock: 16% - (16% x 35%) = 10.40%