A. Assume that a customer has an opportunity cost of 8%. She would like to invest in a common stock currently selling for $56 and the dividend receive last year was $2,75. with a projected growth rate of 4%. Would she invest, that is buy the common stock? Why?

B, The customer is also interested in in a preferred stock that is currently paying a dividend of $2.00. Assuming her required rate (opportunity cost) remain the same what is the maximum price she will be willing to pay for this asset to be added into her portfolio of investments.