1. The common stockholders receive two types of return from their investment. What are they?
2.(Preferred stock valuation) What is the value of a preferred stock when the dividend rate is 16 percent on a $100 par value? The appropriate discount rate for a stock of this risk level is 12 percent.
3. (Common stock valuation) Crosby Corporation common stock paid $1.32 in dividends last year and is expected to grow indefinitely at an annual 7 percent rate. What is the value of the stock if you require an 11 percent return?