What is the annual market discount rate implied facts

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a) Preferred shares of SSH Inc. currently sell for $50 per share and offer a dividend of $6 per share, which is not expected to change. If Latrice is looking for a 10% return on investment are SSH Inc. shares a good choice? Briefly explain.

b) Preferred shares of Wellman Corp. just paid a dividend of $2 per share and the dividend is expected to grow by 5% every year. If the market discount rate on these preferred shares is 15%, what should be the price of a preferred share of Wellman Corp. today?

c) Common shares of Wellman Corp. just paid a dividend of $0.25 per share. Wellman Corp. pays out 40% of its profits to shareholders and currently has an 18% return on equity. If the market discount rate is 15%, what is the price of a common share of Wellman Corp. today?

d) Suppose someone buys Generic Inc. for $5 per share right now. In one year the stock pays out a dividend of $0.15 per share and can be sold for $5.60 per share. What is the annual market discount rate implied these facts?

Reference no: EM132461035

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