A share of preferred stock has a par value of $100, an annual dividend of 5% and a current market price of $63.

What is the rate of return on the preferred stock?

2) Lightpoint Inc. forecasts a net income of $45 million during the coming year, which is expected to grow by 4% per year forever. The company plans to pay out 40% of net income as dividends and repurchase shares worth 15% of net income every year.

The company has 35 million shares outstanding and a cost of equity of 12%.

What is the total payout to shareholders next year (in $ million)?

What is the present value of future dividends and repurchases (in $ million)?

What is the share price?