1. Alvarez Industries stock currently sells for $90 a share. It just paid a dividend of $4.77 a share (that is, D₀= $4.77). The dividend is expected to grow at a constant rate of 6.5 percent a year. What is the required rate of return?

2. Hodge Technologies is expected to generate $160 million in free cash flow next year, and FCF is expected to grow at a constant rate of 8 percent per year indefinitely. Hodge has no debt or preferred stock, and its weighted-average cost of capital is 10 percent. If Hodge has 50 million shares of stock outstanding, what is the stocks value per share?

3.What would be the expected rate of return on a perpetual preferred stock with a $100 par value, a stated dividend of 9 percent of par, and a current market price of $120?