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a) A company just paid a dividend of Do = $5.00 on its preferred stock. The dividend amount will remain constant. The discount rate
a) A company just paid a dividend of Do = $5.00 on its preferred stock. The dividend amount will remain constant. The discount rate (i.e., market capitalization rate) of the company is k = 8%. What is the intrinsic value of the stock Po? b) A company just paid a dividend of Do = $2.50. The dividend is expected to grow at a rate of g = 5% per year. The discount rate (i.e., market capitalization rate) of the company is k = : 6%. What is the intrinsic value of the stock Po? c) A company just paid a dividend of Do $3.00. The dividend is expected to grow at a rate of g = 2% per year. The market price of the stock is Po = $30. What is the discount rate (market capitalization rate) of the stock?
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Step: 1
a To calculate the intrinsic value of the preferred stock we can use the dividend discount model Sin...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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