You are given the following information for the common stock of ABC Inc.: (1) The risk free rate is 2%. (2) The rate of return on the market is 8%. (3) The expected growth rate in dividends is 4%. (4) The last dividend paid was $0.80 per share. (5) Beta is 1.0

a) What price should ABC sell for today? (8 pts)

b) What price should ABC sell for, if the growth rate in dividends increase to 6% and beta increases to 1.5. (6 pts) c) If beta remains at 1.5, compute the price of the preferred stock of ABC