Question
1. Tresnan Brothers is expected to pay a $3.90 per share dividend at the end of the year (i.e., D 1 = $3.90). The dividend
1. Tresnan Brothers is expected to pay a $3.90 per share dividend at the end of the year (i.e., D1 = $3.90). The dividend is expected to grow at a constant rate of 6% a year. The required rate of return on the stock, rs, is 20%. What is the stock's current value per share? Round your answer to the nearest cent.
2. Earley Corporation issued perpetual preferred stock with a 12% annual dividend. The stock currently yields 10%, and its par value is $100. Round your answers to the nearest cent.
a) What is the stock's value? $
b) Suppose interest rates rise and pull the preferred stock's yield up to 15%. What is its new market value? $
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