1. PREFERRED STOCK VALUATION
Farley Inc. has perpetual preferred stock outstanding that sells for $34.00 a share and pays a dividend of $3.00 at the end of each year. What is the required rate of return? Round your answer to two decimal places.
_____%
2. A share of common stock has just paid a dividend of $4.00. If the expected long-run growth rate for this stock is 5 percent, and if investors require a 17 percent rate of return, what is the expected price of the stock?