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The last dividend Company X paid was $ 5 and the constant growth rate of dividends...

The last dividend Company X paid was $ 5 and the constant growth rate of dividends is 2%. The current price of this stock is $20 per share. What is the required rate of return (yield) on that stock?

27.5%

15%

8%

35%

1b.

A preferred stock is paying annual dividend of $5 forever. What is the price of this preferred stock if the yield (required rate of return on this preferred stock) is 10%?

$ 2

$ 20

$ 5

$ 50
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