1. What is the value of a preferred stock (assume: Zero growth) paying a fixed dividend of $5 per share when the discount rate is 9%?
a. 51.24
b. 78.80
c. 55.56
d. 44.23
2. High Flyer industries just paid its annual dividend of $4 per share.The dividend is expected to grow at 11% indefinitely. The beta is 1.5,Rfr is 5%. Market risk premium is 7.5%. What is the intrinsic value of the stock?
a. 84.57
b. 25.45
c. 31.45
d. 36.63