Problem 14-01

Big Oil, Inc. has a preferred stock outstanding that pays a $8 annual dividend.

If investors required rate of return is 10 percent, what is the market value of the shares?

Round your answer to the nearest cent.

Answer: $

If the required return declines to 5 percent, what is the change in the price of the stock?

Round your answer to the nearest cent.

The price -Select: --- increases or decreases? ....by.... $ (What is the number?)