Equity portfolios. Suppose you are creating an investment portfolio. You have decided upon two assets:

55 Fifty shares of common stock in Firm A. The stock just paid a dividend of $1.25. However, they do not plan to pay another dividend until year four (as they expand their company). That dividend will be 5% greater than the current dividend. They then plan to increase the dividend by 8% for the next two years (to gain back investors). Following that, the dividend will increase by 5% for the rest of time. Firm A has a required return of 9.14%.

55 Seventy-five shares of preferred stock in Firm B. The preferred stock is a 2%, $20 pfd stock. Firm B has a 5.81% required return on preferred stock.

What should be the total cost of your portfolio according to the DGM?