FIN 300 Quiz 4 Stock solutions FALL2020.pdf - Quiz#4 Stock...

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Quiz #4 Stock Solutions Fall 2020 1. Builtrite preferred stock has a 5%(4%) coupon based on a par value of $50 a share. Currently, investors require a 6% (4%) return. What is the value of Buil trite’s preferred stock?
2. Given the following information, calculate the current value of the stock: current dividend is $3.00, projected super normal growth for three years at 20%, growth rate after year 3 should remain constant at 9% (11%)and you want to earn a 16% annual return. What should you pay for the stock?
3. Builtrite common stock is currently selling for $40 ($50) and recently paid a dividend of $3.00 ($3.50). The stock has a projected constant growth rate of 8%.

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