Preferred stock valuation and corporate valuation

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Reference no: EM132022519

Preferred stock valuation

Earley Corporation issued perpetual preferred stock with a 11% annual dividend. The stock currently yields 8%, and its par value is $100.

What is the stock's value? Round your answer to two decimal places.

__________$

Suppose interest rates rise and pull the preferred stock's yield up to 12%. What is its new market value? Round your answer to two decimal places.

___________$

Corporate valuation

Scampini Technologies is expected to generate $50 million in free cash flow next year, and FCF is expected to grow at a constant rate of 3% per year indefinitely. Scampini has no debt or preferred stock, and its WACC is 12%. If Scampini has 35 million shares of stock outstanding, what is the stock's value per share? Round your answer to two decimal places.

Each share of common stock is worth $___________, according to the corporate valuation model.

Reference no: EM132022519

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