Firm promises to increase dividends at a fixed rate

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1. The next year's dividend expected on a stock is $3.92. The firm promises to increase dividends at a fixed rate of 3.6%, and the market requires a 12.1% rate of return on this investment. What is the market price of the stock?

2. A preferred stock promises to pay a fixed dividend of $8.66 every year. The market requires a 12.1% rate of return on this investment. What must be the price of the stock?

Reference no: EM131044705

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