6.) Assume you are planning to invest $5,000 each year for six years and will earn 10 percent per year. Determine the future value of this annuity if your first $5,000 is invested at the end of the first year. Chapter 10 Problem 22, 23 and 24 22.) The Fridge Air Companys preferred stock pays a dividend of $4.50 per share annually. If the required rate of return on comparable quality preferred stocks is 14 percent, calculate the value of Fridge Airs preferred stock. 23.) The Joseph Company has a stock issue that pays a fixed dividend of $3.00 per share annually. Investors believe the nominal risk-free rate is 4 percent and that this stock should have a risk premium of 6 percent. What should be the value of this stock? 24.) The Lo Company earned $2.60 per share and paid a dividend of $1.30 per share in the year just ended. Earnings and dividends per share are expected to grow at a rate of 5 percent per year in the future. Determine the value of the stock: a. if the required rate of return is 12 percent b. if the required rate of return is 15 percent c. Given your answer to (a) and (b), how are stock prices affected by changes in investors required rates of return? DUE DATE TUES APRIL 21
