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general to handle the case of a zero growth stock, where the dividend is expected to remain constant over time. In this situation, the equation is: payments in perpetuity. The valuation equation is simply the current dividend divided by the required rate of return Problem 2: Carlysle Corporation has perpetual preferred stock outstanding that pays a constant annual dividend of $1.50 at the end of each year. If investors require an 8% return on the preferred stock, what is the price of the firm's perpetual preferred stock? Round your answer to the nearest cent. Do not round intermediate calculations For many companies, it is not appropriate to assume that dividends will grow at a constant rate. Most firms go through life cycles where they experience different growth rates during different parts of the cycle. For valuing these firms, the generalized valuation and the constant growth equations are combined to arrive at the nonconstant growth valuation equation: Ds Basically, this equation calculates the present value of dividends received during the nonconstant growth period and the present value of the stock's horizon value, which is the value at the horizon date ouan it tive Problem 3 sume today s December, 20 a magine works Inc ust pal a dividend of S 20 per share at the end of 2013. The dividend is expected to grow at 12% per year for 3 war, a e which ti ne i er ete to tror at i distan at 6 k arrualt. T e compar y s cost of equity r is 9%, usin the dividend growth model allowing for non constant growth what should s stock today (December 31, 2013)? Round your answer to the nearest cent. Do not round intermediate calculations