Constant growth valuation-preferred stock rate of return

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Constant Growth Valuation

Crisp Cookware's common stock is expected to pay a dividend of $2.5 a share at the end of this year (D1 = $2.50); its beta is 1.15; the risk-free rate is 3.5%; and the market risk premium is 4%. The dividend is expected to grow at some constant rate g, and the stock currently sells for $43 a share. Assuming the market is in equilibrium, what does the market believe will be the stock's price at the end of 3 years (i.e., what is )? Do not round intermediate steps. Round your answer to the nearest cent.

Preferred Stock Rate of Return

What is the required rate of return on a preferred stock with a $50 par value, a stated annual dividend of 7% of par, and a current market price of (a) $67, (b) $77, (c) $120, and (d) $133 (assume the market is in equilibrium with the required return equal to the expected return)? Round the answers to two decimal places.

1. %

2. %

3. %

4. %

Reference no: EM131188046

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