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Q6 1.A company's perpetual preferred stock currently sells for $88 per share, and pays an annual dividend of $6. In issuing the preferred shares, the

Q6

1.A company's perpetual preferred stock currently sells for $88 per share, and pays an annual dividend of $6. In issuing the preferred shares, the company incurs flotation costs of 2%. The company's cost of preferred stock is _____% Answer as a percentage to the nearest hundredth as in xx.xx recalling that for two place percentage accuracy, your rate accuracy should be to four places.

2.If your stock pays a dividend D0 = $0.75 at t = 0.and will experience a constant growth of 6.4 percent forever into the future, what should be the price of the stock if the required return for such stocks is 10.5 percent? Note: The dividend shown above is at t = 0, not t=1. Answer to the nearest cent, xxx.xx and enter without the dollar sign.

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