Problem \#3 - Stock Valuation a) A company has 10 million shares of common stock selling at $50 per share. It pays a dividend of $4 this year and the dividend is growing at 5% annually. Using the Dividend Discount Model, what is the cost of equity? b) If investors require a 7% annual return on a 10% preferred stock with a par value of $100, what should the stock price be