2024 – The Fridge Air Company s preferred stocks pays a dividend of 4 50 per share annually If the required rate of return

 

1. The Fridge-Air Company‘s preferred stocks pays a dividend of $4.50 per share annually. If the required rate of return on comparable quality preferred stock is 14 percent, calculate the value of Fridge-Air preferred stock?

2. The Joseph Company has a stock issue that pays a fixed dividend of $3.00 per share annually. Investors believe that nominal risk-free rate is 4% and that this stock should have a risk premium of 6 %. What should be the value of this stock?

3. The Lo Company earned $2.60 per share and paid a dividend of $1.30 per share in the year just ended. Earnings and dividends per shares are expected to grow at rate of 5% per year in the future. Determine the value of the stock:

 

1. If the required rate of return is 12%

2. If the required rate of return is 15%

3. Given your answers to (a) and (b), how are stock prices affected by changes in investors’ required rates of return?

 

Please show work(how you got the answers) for all question!!  Thanks