Mini-Case You bave finally saved $10,000 and are ready to make your first Yur required rates of return for these investments are investment. Yoa have the three following alternatives for invest- 6 percent for the bond, 7 percent for the preferred stock, and ing that money . Capital Cities ABC, Inc. bonds with a par value of $1,000 swer the following questions. 15 percent for the common stock. Using this information, an- and a coupon interest rate of 8.75 percent, are selling for a. Calculate the valoe of each investment based on your re $1,314 and mature in 12 years. Southwest Bancorp preferred stock is paying a dividend of b. Which investinent would you select?.Why? $2.50 and selling for $25.50 quired rate of return. c. Assume Emerson Electric's managers expect an earnings Emerson Electric common stock is selling for $36.75. The downturn and a resulting decrease in growth of 3 percent stock recently paid a $1.32 dividend and the firm's carnings How does this affect your answers to parts a and b? per share has increased from $1.49 to $3.06 in the past five d. What required rates of return would make you indifferent to years. The firm expects to grow at the same rate for the all three options? foreseeable future