Question 2 (a) Dividend for first second and third year are expected in the amount of RMI, RM2 and RM2.50 respectively and after that dividends will grow at a constant rate of 5 % per year. Required rate is 10%. Calculate the value of stock? (10 marks) (b) Suppose a firm is expected to increase dividends by 20% in one year and by 15% in two years. After that dividends will increase at a rate of 5% per year indefinitely. If the last dividend was RM1 and the required return is 20%, what is the price of the stock? (10 marks) ) Give TWO (2) basic rights of preferred stockholders (2 marks) (d) Briefly discuss the features of preferred stock. (3 marks) [Total: 25 Marks]