What is the growth rate for this stock?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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1. ABC Company decided to enter into a large venture. Thus, there is a need for additional funds. The financial manager intends to issue preferred stock with a perpetual annual dividend of Php 5 per share and a par value of Php 30. If the required return on this stock is currently 20%, what is the stock’s estimated (market) value? 

A. Php 150
B. Php 100
C. Php 50
D. Php 25
 
2. ABC Power Inc. is expected to pay cash dividends of Php 1.00 per share at the end of the year (D1 = Php 1.00). Each share sells for Php 20 and the required rate of return is 11%. The dividend is expected to grow at a constant rate forever. What is the growth rate for this stock? *
 
A. 5%
B. 6%
C. 7%
D. 8%
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