1. E-Eyes.com just issued some new preferred stock. The issue will pay an annual dividend of $7 in perpetuity, beginning 5 years from now. If the market requires a 6 percent return on this investment, how much does a share of preferred stock cost today?

• $87.18

• $116.67

• $87.79

• $92.41

• $97.03

2.

Lohn Corporation is expected to pay the following dividends over the next four years: $15, $10, $6, and $4. Afterward, the company pledges to maintain a constant 4 percent growth rate in dividends forever.

If the required return on the stock is 13 percent, what is the current share price?

• $62.80

• $54.11

• $56.07

• $53.26

• $57.75