A firm has issued cumulative preferred stock with a $100 par value and a 12 percent annual dividend. For the past two years, the board of directors has decided not to pay a dividend. The preferred stockholders must be paid prior to paying the common stockholders. Tangshan China's stock is currently selling for $160 per share and the firm's dividends are expected to grow at 5 percent indefinitely. In addition, Tangshan China's most recent dividend was $5.50. The expected risk free rate of return is 3 percent, the expected market return is 8 percent, and Tangshan has a beta of 1.20. a. What is the expected return based on the dividend valuation model? b. What is the required return based on the CAPM? c. Would Tangshan China be a good investment at this time? Explain? Mia's Doll Company has an outstanding preferred issue of stock with a par value of $100 and an annual dividend of 10 percent (of par). Similar risk preferred stocks are yielding an 11.5 percent annual rate of return. a. What is the current value of the outstanding preferred stock? b. What will happened to prices as the risk-free rate increases? Explain