Answer:

Pit-5 Common stoolt value Zero growth Kelsey Drums, Inc., is a well-established supplier ofne percussion instruments to orchestras all over the United States. The company's class A common stock has paid a dividend of 52.55 per share per year for the last 12 years. Management expects to continue to pay at that amount for the foreseeable future. Kim Arnold purchased 250 shares of Kelsey class A common 15 years ago at a time when the required rate of return for the stock was 15%. She wants to sell her shares today. The current required rate of return for the stoclt is 5.25%. How much total capital gain or loss will Kim have on her shares? PT-T Preferred stock valuation Jones Design wishes to estimate the value of its outstanding preferred stoclt. The preferred issue has a par value of $Eland pays an annual dividend of 55.45 per share. Similar-risk preferred stocks are currently earning an annual rate of return of 9.3%. a. I'a'll'hat is the market value of the outstanding preferred stock? it. It an investor purchases the preferred stock at the value calculated in part a. how much does she ga'et or lose per share if she sells the stock when the required return on similar-risk prefen'ed stocks has risen to 15.5%? Explain. PTt'l Common stock value: Constant growth The common stock of Ban Labs Inc., trades for $114 per share. Investors expect the company to pay a $1.35 dividend next year, and they expect that dividend to grow at a constant rate forever. If investors require a15.5% retum on this stock, what dividend growth rate do they anticipate