Step TWO: Calculations Part 1: Financial Calculations The following financial calculations were covered in the competency content. Calculate the following seven problems showing formulas for the ratio as well as the answer. Use the provided Calculation worksheet to include the calculations, computation details (showing your work), and answers. Problem #3 - Stock Valuation a) A company has 10 million shares of common stock selling at S50 per share. It pays a dividend of $4 this year and the dividend is growing at 5% annually. Using the Dividend Discount Model, what is the cost of equity? b) If investors require a 7% annual return on a 10% preferred stock with a par value of $100, what should the stock price be? Problem #4 Calculating the Expected Rate of Return