1. Kwak Motors, Inc. pays a $1.77 preferred dividend every quarter and will maintain this policy forever. What price should you pay for one share of preferred stock if you want an annual return of 9.25% on your investment?

a. $66.54

b. $70.54

c. $74.54

d. $76.54

2. The most recent paid dividend (Div₀) is $1.80, the growth rate (g) is 6%, and the required rate of return (r) is 12%. What is the stock price according to the constant growth dividend model?

a. $31.80

b. $30.80

c. $30.00

d. $15.00