1.A share of preferred stock pays a $12 annual dividend.

a)Calculate its intrinsic value to an investor whose required rate of return is 10%

b)If the preferred stock sales for $105 per share, is this a desirable investment?

c)If the stock is purchased for $95, what is the stock's required rate of return?

Given

Par value $1,000

Coupon rate10%

Maturity period10 years

Required - compute the value of the bond assuming the following RRR:

a)10%

b)8%

c)12%