• What would you be willing to pay (assuming that you could live forever, and hence could receive all the cash flows) for a preferred share of stock in DePaul University, that promises you to pay a cash dividend to you at the end of the year of $25, which will increase every year by 2%, forever. The interest rate is fixed at 5%.
• What would you be willing to pay if the share of stock paid out its first $25 right now, given dividend growth and interest rate stay the same?
• What if the cash dividend instead decreases by 2% per year?