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Problem 14-01

Big Oil, Inc. has a preferred stock outstanding that pays a $7 annual dividend. If investors required rate of return is 5 percent, what is the market value of the shares? Round your answer to the nearest cent.

$

If the required return declines to 2 percent, what is the change in the price of the stock? Round your answer to the nearest cent.

The price -Select-increasesdecreasesItem 2 by $ .