True or false
1. Companies raise capital by issuing new securities in secondary markets.
2. Preferred dividend payments are fixed amounts paid on a regular basis.
3. Preferred stock with no fixed maturity can be valued using the present value of a perpetuity formula.
4. The value of a supernormal growth stock is the present value of the mixed growth dividends plus the present value of the constant growth dividends.
5. Grant, Inc. is a fast growing company and its dividend is expected to grow at a rate of 25 percent for the next three years. It will then settle to a constant growth rate of 10 percent. If the last dividend was $5.00 and the required rate of return is 18 percent, what is the current price of the stock?