Chapter 9, Problem 9.10P

a)

Summary Introduction

To calculate: The growth rate of dividends from 2011 to 2015.

Introduction:

Preferred stock is the kind of stock in which the shareholder would have a fixed dividend, which will be paid to them before the ordinary share dividends.

b)

Summary Introduction

To calculate: The net proceeds.

Introduction:

Preferred stock is the kind of stock in which the shareholder would have a fixed dividend, which will be paid to them before the ordinary share dividends.

c)

Summary Introduction

To calculate: The cost of retained earnings using the constant-growth valuation model.

Introduction:

Preferred stock is the kind of stock in which the shareholder would have a fixed dividend, which will be paid to them before the ordinary share dividends.

d)

Summary Introduction

To calculate: The cost of new common stock using the constant-growth valuation model.

Introduction:

The cost of common stock is defined as the required return on the stock by the investors adjusted to the cost of new issue of stocks. The capital asset pricing model describes the relationship between the required return of some asset and the non-diversifiable risk of it, measured by a beta coefficient.