3. The ACC Inc. has both common stock and preferred stock outstanding. Common Stock - 1 million shares of common stock are outstanding. Since it is an old and established firm, the company has paid dividends every year including today. However, to finance the investment in this new project, the ACC decides not to pay any dividends for the next 3 years. At the end of year 4, the company will pay a dividend of $2.2 per share. From there on, the company's dividends are expected to grow at 25% per year for the following 3 years, and at 6% per year forever thereafter. Analysts argue that investors would require a return of 18% for the following 5 years and 13% thereafter forever. 2 Preferred Stock - 250,000 shares of cumulative preferred stock are outstanding. The company pays dividends of $3.1 per share every year including today. However, to finance the investment in this new project, the ACC decides not to pay any dividends for the following 3 years to its preferred stockholders as well. At the end of year 4, the company will continue to pay annual dividends of $3.1 per share every year. Analysts estimate that investors require a return of 12% from this investment. a. Given all this information, i. Calculate the price at which ACC Inc.'s common stock can trade in the market today. ii. Calculate the price at which ACC Inc.'s cumulative preferred stock can trade in the market today. b. Suppose 4 years have passed. Holding everything else constant, i. Calculate the value of ACC Inc.'s common stock now. ii. Calculate the value of ACC Inc.'s preferred stock now. 2/3