1. The stock's book value per share and market price is CAD 98.30 ad CAD 95.15, respectively. What is the cost of equity of a fairly valued CAD 100 par value preferred stock that pays 7.5% annual dividend?

2. What is the effect in the stock valuation if the growth rate increase by the same rate as the increase in discount rate?

3. How can an equity investor make a profit in the imperfect market?

4. A business starts this year with 1,000,000 assets with no debt. The expected ROE equals 10%. Suppose the firm decides to have payout of 40% for this year. How much is the expected total dividends for next year?