1. Jones Company preferred stock is expected to pay a dividend of $1.75 per share. If your required rate of return is 7%, what is the most that you should be willing to pay for a share of Jones’ preferred stock today?
A) $25.00
B) $17.50
C) $1.87
D) $26.88
2. Apple, Inc. just paid a dividend of $2.75 a share. Dividends are expected to grow at a rate of 8% per year for the next four years and then at a rate of 3% thereafter. If your required rate of return is 6%, what is the most that you should be willing to pay for a share of Apple stock today?
A) $107.16
B) $113.24
C) $130.85
D) $134.31