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P5-1. Argaiv Towers has outstanding an issue of preferred stock with a par value of $100. It pays an annual dividend equal to 8% of par value. If the required return on Agaiv preferred stock is 6%, and if Argaiv pays its next dividend in on year, What is the market price of the preferred stock today?

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P5-2. Artivel Mining Corp’s preferred stock pays a dividend of $5 each year. If the stock sells for $40 and the next dividend will be paid in one year, What return do investors required on Artivel preferred stock?

P5-3. Silaic Tools has issued preferred stock that offers investor a 10% annual return. The stock currently ; sells for $80, and the next dividend will be paid in one year. How much is the dividend?

P5-18. The firm’s weighted average cost of capital is 12%. It has $1,400,000 of debt at market value and $500,000 of preferred stock at its assumed market value. The estimated free cash flows over the next five years, 2013 through 2017, follow. Beyond 2017 to infinity, the firm expects its free cash flow to grow by 4% annually.

Year ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; Free Cash Flow

2013 ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; $250,000

2014 ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ;$290,000

2015 ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ;$320,000

2016 ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ;$360,000

2017 ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; $400,000

a) Estimate the value of Roben Corporation’s entire company by using the free cash flow approach?

b) Use your finding in par (a), along with the data provide above, to find Roban Corporation’s comm stock value?

c) If the firm plans to issue 220,000 shares of commons stock, What is its estimated value per share?

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