1) If a large corporation paid a dividend of $3.49 this past year, and there is a growth rate of 3.5%, based upon a 7% rate of return, what is the price of share of this common stock?
2) A corporation is making preferred dividend payments of $ 0.50 per quarter and the rate of return is 4.5%. What is the price of share of this preferred stock? (Hint: The approach is similar to the calculation of the price of a share of common stock, but just keep in mind that preferred dividends are fixed and do not grow).