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How do calculate the cost of preferred stock

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Reference no: EM132627481

Question 1: Assume that Business B has preferred stock outstanding with par value of $1050, dividend per share of $68.50, and a current market value of $800 per share. Calculate the cost of preferred stock.

Question 2: A company presently pays a dividend of $1 per share and has a share price of $20.

If this dividend was expected to grow at a 12 % rate forever, what is the firm's expected, or required, return on equity using a dividend discount model approach?

Reference no: EM132627481

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