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RockTop Construction expects to pay a $1.10 dividend next year to its common stock holders. In each following year, common stock dividends will grow at
RockTop Construction expects to pay a $1.10 dividend next year to its common stock holders. In each following year, common stock dividends will grow at 4%. RockTop pays its preferred shareholders a dividend of $2.25 every year. If common stock sells at $12.57 per share and preferred stock sells at $23.41 per share, what are the required returns on each type of stock? Why might an investor prefer preferred stock? Why might an investor prefer common stock?
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