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I'm have a difficult time with the below 2 problems. Could you please help me. Thanks! James Smith is interested in buying the stock of
I'm have a difficult time with the below 2 problems. Could you please help me. Thanks!
- James Smith is interested in buying the stock of First National Bank. While the bank's management expects no growth in the near future, James is attracted by the dividend income. Last year the bank paid a dividend of $5.50. If James requires a return of 10.0 percent on such stocks, what is the maximum price he should be willing to pay for a share of the bank's stock?(Round answer to 2 decimal places, e.g. 15.25.)
- The First Bank of Flagstaff has issued perpetual preferred stock with a $100 par value. The bank pays a quarterly dividend of $1.50 on this stock. What is the current price of this preferred stock given a required rate of return of 10.0 percent?(Round answer to 2 decimal places, e.g. 15.25.)
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