QUESTION 29

1. The present market price for preferred stock is $55.50. If the stock pays a dividend of $2.14, what is the expected rate of return?

   		3.86%
   		3.47%
   		4.13%
   		4.29%

4.4 points

QUESTION 30

1. All In Corporations common shareholders expect to receive $1.635 per share dividend next year based on the fact that they received $1.50 last year and they expect dividend to grow 9% next year. Furthermore, analysts predict that dividends will continue to grow at a rate of 10% into the foreseeable future. If All In were to issue common stock at $37.50 a share, the firm would incur a $4.50 per share cost to sell the new shares. What is the cost of the new common stock issue?

   		11.97%
   		13.95%
   		12.91%
   		14.86%