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 the preferred.
B) preferred stock returns 0.34% more than the common.
C) common stock returns 2.32% more than the preferred.
D) returns are equal on an after-tax basis.