Problem 1) Made-It common stock currently sells for $22.50 per share. The company's executives anticipate a constant growth rate of 10 percent and an end of year dividend of $2.
A) What is your expected rate of return if you buy the stock for $22.50.
B) If you require a a 17 percent return, should you purchase the stock?
Problem 2) Pioneer preferred stock is selling for $33 per share in the market and pays a $3.60 annual dividend.
A) What is the expected rate of return on the stock.
B) If your required rate of return is 10 percent , what is the value of the stock for you.
C) Should you acquire the stock.