How much does share of preferred stock cost today

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1. The Jackson-Timberlake Wardrobe Co. just paid a dividend of $2.50 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year indefinitely. If investors require a 10 percent return on The Jackson-Timberlake Wardrobe Co. stock, what is the current price? Answer with 2 decimals (e.g. 10.12).

2. E-Eyes.com Bank just issued some new preferred stock. The issue will pay a $8 annual dividend in perpetuity, beginning 11 years from now. If the market requires a 0.13 return on this investment, how much does a share of preferred stock cost today? Enter the answer with 2 decimals (e.g. 45.45).

Reference no: EM132003388

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