CORPORATE VALUATION free cash flow next year, and FCF is expected to per 40 million is the stock's value required rate of return? current market price of (a) S61, (b) $90, (e) $100, and (d) $138? indefinitely. Scampini has no debt or preferred stock, and its WACC is 10%. If Scam sells for $30 a share and pays a dividend of $2.75 at the end of each year. What is the PREFERRED STOCK VALUATION Farley Inc. has perpetual preferred stock outstand perpetual preferred stock with a $100 par value, a stated dividend of 10% of par, and PREFERRED STOCK RATE OF RETURN What will be the nominal rate of retum on PREFERRED STOCK VALUATION Earley Corporation issued perpetual preferred stod b. Suppose interest rates rise and pull the preferred stock's yield up to 9%. What is listes Investors require an 8% rate of retum 9-5 share? 9-6 Intermediate 9-7 Problems 7-15 9-8 an 8% annual dividend. The stock currently yields 7%, and its par value is $100 a. What is the stock's value? market value? 9-9 PREFERRED STOCK RETURNS Avondale Aeronautics has perpetual preferred stock outstanding with a par value of $100. The stock pays a quarterly dividend of $1.00 and a current price is $45. a. What is its nominal annual rate of return? b. What is its effective annual rate of return? 9-10 VALUATION OF A DECLINING GROWTH STOCK Maxwell Mining Company's ore reserva are being depleted, so its sales are falling. Also, because its pit is getting deeper each yea: its costs are rising. As a result, the company's earnings and dividends are declining constant rate of 6% per year. If Do = $3 and rs = 10%, what is the value of Maxwell Mining's stock? 9-11 VALUATION OF A CONSTANT GROWTH STOCK A stock is expected to pay a dividendo $2.75 at the end of the year (i.e., D = 2.75), and it should continue to grow at a condan rate of 5% a year. If its required return is 15%, what is the stock's expected price 4 yes from today? 9-12 VALUATION OF A CONSTANT GROWTH STOCK Mather Coman