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Page  CHAPTER 8 PROBLEMS VALUATION AND CHARACTERISTICS OF STOCK PROBLEM 8-1 PREFERRED STOCK EXPECTED RETURN DATA STOCK A STOCK B Annual dividend $4.50 $4.25 Market Price $35.00 $36.00 Required annual return 12% Expected return Difference PROBLEM 8-2 MEASURING GROWTH Growth rate 7% Return on equity 12% Retention rate PROBLEM 8-3 COMMON STOCK VALUATION Return on equity 11.50% Retention rate 55% Dividend $3.25 Market price $40.00 A) Growth rate B) Next year's dividend Expected return C) Required rate of return 13% Present value
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Page  PROBLEM 8-4 COMMON STOCK VALUATION Dividend $1.00 Market Price $32.50 Required rate of return 12% Growth rate PROBLEM 8-5 PREFERRED STOCK VALUATION DATA Dividend rate 14% 14 Par value 100.00 Discount rate 12% Present Value = PROBLEM 8-6 PREFERRED STOCKHOLDER EXPECTED RETURN Market Price 42.16 Dividend yield 1.95 Expected rate of return = PROBLEM 8-7 PREFERRED STOCKHOLDER EXPECTED RETURN A) Market price per share 40.00 Dividends per share 3.40 Expected return = B) Required rate of return 8% Worth to you = PROBLEM 8-8 COMMON STOCK VALUATION DATA
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This note was uploaded on 04/16/2008 for the course FIN 100 taught by Professor N/a during the Spring '08 term at Baylor.

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