Dividend Yield =PriceDividend100, Intrinsic value =1+rDIV1+P1, Rate of return =P0P1+DIV1P0100 Capital Gain =P1P0 1. (a) Favored stock will pay dividend this year of $2.40 per share. Its dividend yield is 8%. At what price is the stock selling? (b) Preferred products has issued a preferred stock with an $8 annual dividend that will be paid in perpetuity. If the discount rate is 12%, what is the price of the stock? What is the dividend yield? (c) Preferred products has issued a preferred stock with an $8 annual dividend that will be paid in perpetuity. If the discount rate is 12%, what is the price of the stock next year? If you sell the stock you bought in part (b) next year, what is your capital gain? 2. (a) Steady As She Goes Inc. will pay a year-end dividend of $3 per share and the price next year is expected to be $30. If the rate of return is 10%, what is the intrinsic value (present value) of the stock? (b) If you bought a share of the above stock for $25 today, what is your expected return on the stock of Steady As She Goes? (c) Steady As She Goes Inc. will pay a dividend of $3 per share. Investors expect the share to grow at a rate of 4% indefinitely. If the stock sells for $25 a share today, what is the rate of return on the stock? 3. (a) Waterworks has a dividend yield of 8%. If its dividend grows by a constant rate of 5%, what is r