Reference no: EM132941726

Problem 1: A firm has to pay a dividend of $1.20 per share till perpetuity, a zero growth rate of dividends, and a required return of 10 percent. The value of the firm's preferred stock is ________.

A) $120
B) $10
C) $12
D) $100

Problem 2: Emmy Lou, Inc. has an expected dividend next year of $5.60 per share, a growth rate of dividends of 10 percent, and a required return of 20 percent. The value of a share of Emmy Lou, Inc.'s common stock is ________.

A) $28.00
B) $56.00
C) $22.40
D) $18.67