### Explain what would be the market value of the stock

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1) Out-of-Sight Telecommunications (OST) has preferred stock outstanding with a par value of \$40 per share that pays an annual dividend equal to 5 percent. (a) If investors who purchase similar investments require a 10 percent return, what is the market value of OST's preferred stock? (b) What would be the market value of the stock if investors require an 8 percent return?

2) Suppose your company is expected to grow at a constant rate of 6 percent long into the future. In addition, its dividend yield is expected to be 8 percent. If your company expects to pay a dividend equal to \$1.06 per share at the end of the year, what is the value of your firm's stock?

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