Compute preferred stock required rate of return

Reference no: EM1375009

Question1) EMC has preferred stock outstanding which pays a dividend of $5.00 at the end of each year. This stock was issued in perpetuity and has no maturity date. EMC's preferred stock sells for $60 per share.

Compute this preferred stock's required rate of return

Question2) Flanigan Corporation has just paid an annual dividend of $1.50 per share (D0 = $1.50). The dividend is expected to grow 5% per year for the next 3 years, and then 10% a year thereafter.

Compute Flanigan Corporation's expected dividend per share for each of the next 5 years.

Question3) Pablo's Pizza International Inc.'s common stock currently sells for $20 per share. The stock has just paid an annual dividend of $1.00 (D0 = $1.00). The dividend is expected to grow at a constant rate of 10% per year.

a. Compute the stock price expected 1 year from now.
b. Compute the required rate of return on PPI's common stock.

Reference no: EM1375009

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