Question 1

a) Xerox pays an annual dividend of RM 11.50 for each preferred stock to investors required rate of return is 5%. Calculate the value of the preferred shares.

b) Summer Corp. pays an annual dividend of RM 44.50 for each preferred shares and the investor required rate of return is 12%. Calculate the value of the preferred stock.

c) Suki want to buy preferred shares at Snowy Company. After done little research, he finds out that the shares pay an annual dividend of RM 16 for each share and rate of return is 12%. Calculate the value of common share.