3. LSP co. has a preferred stock with an annual dividend of $8.5 per share. If the required return on this preferred stock is 7.5%, at what price should the stock sell? *

a) $106

b) $105

c) $103

d) $106.67

e) None of the above

4. TSE Co. paid a $2 per share annual dividend last week. Dividends expect to increase by 5% annually. What is one share of this stock worth to you today if your required rate of return 14%? *

a) $23.33

b) $22.22

c) $15

d) $14.29

e) None of the above

5. LSP Co.s stock price is $58.88, and it recently paid a $2.00 dividend. This dividend is expected to grow by 52% for the next 3 years, then grow forever at a constant rate, g; and rs = 12%. At what constant rate is the stock expected to grow after Year 3? *

a) 9.5%

b) 6.25%

c) 15.75%

d) 33.33%

e) None of the above