Solve using formulas

6. North Great Timber Company will pay a dividend of $1.50 a share next year. After this, earnings and dividends are expected to grow at a 9 percent annual rate indefinitely. Investors currently require a rate of return of 13 percent. The company is considering several business strategies and wishes to determine the effect of these strategies on the market price per share of its stock. a. Continuing the present strategy will result in the expected growth rate and required rate of return stated above. b. Expanding timber holdings and sales will increase the expected dividend growth rate to 11 percent but will increase the risk of the company. As a result, the rate of return required by investors will increase to 16 percent. c. Integrating into retail stores will increase the dividend growth rate to 10 percent and increase the required rate of return to 14 percent. From the standpoint of market price per share, which strategy is best? 7. A share of preferred stock for the Buford Pusser Baseball Bat Company just sold for $100 and carries an $8 annual dividend. a. What is the yield on this stock? b. Now assume that this stock has a call price of $110 in five years, when the company intends to call the issue. (Note: The preferred stock in this case should not be treated as a perpetual - it will be bought back in five years for $110.) What is this preferred stock's yield to call?