How much should you be prepared to pay for the stock

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Reference no: EM132016919

1. Favored stock will pay a dividend this year of $2.45 per share. Its dividend yield is 7%. At what price is the stock selling? (Do not round intermediate calculations.)

Current price $

2. You believe that the Non-stick Gum Factory will pay a dividend of $4 on its common stock next year. Thereafter, you expect dividends to grow at a rate of 7% a year in perpetuity. If you require a return of 16% on your investment, how much should you be prepared to pay for the stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Stock price $

Reference no: EM132016919

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