3 & 4

3. Problem 9.05 (Corporate Valuation)

Scampini Technologies is expected to generate $150 million in free cash flow next year, and FCF is expected to grow at a constant rate of 3% per year indefinitely. Scampini has no debt or preferred stock, and its WACC is 10%. If Scampini has 40 million shares of stock outstanding, what is the stock's value per share? Do not round intermediate calculations. Round your answer to the nearest cent.

Each share of common stock is worth $ , according to the corporate valuation model.

4. Problem 9.08 (Preferred Stock Valuation)

Earley Corporation issued perpetual preferred stock with an 11% annual dividend. The stock currently yields 10%, and its par value is $100. Round your answers to the nearest cent.

1. What is the stock's value? $
2. Suppose interest rates rise and pull the preferred stock's yield up to 14%. What is its new market value? $