2.) SPI's preferred stock pays a $1.00 dividend per quarter. The required return, r, is 2.5%...

Question

Question

Answer 1

Answer #1

2)

a)Price = Dividend /required return

= 1 /.025

= $40 per share

b) price= D0(1+g)/(Rs-g)

= 1(1+.005)/(.025-.005)

=1 *1.005 /.02

=50.25 per share

Answer 2

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