The Jones Company has decided to undertake a large project. Consequently, there is a need for additional funds. The financial manager plans to issue preferred stock with a perpetual annual dividend of $5 per share and a par value of $30. If the required return on this stock is currently 20 percent, what should be the stock's market value?

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• Professor Bai is worried about his job security, and has started to venture into a new startup. Perhaps surprisingly, he is able to take his startup to IPO within a 5-year period (please allow me to dream). The firm has just announced its first dividend of $3/share and the firm’s dividend is expected to grow extremely fast for 4 years in a row at 30% each year. However, Professor Bai expects that the company will only grow at 5% after that forever (Professor Bai is vampire and lives forever!!). Expected return (discount rate) for stocks is 12%. Please use the dividend discount model to price the stock at t=0.
• The Jones Company has decided to undertake a large project. Consequently, there is a need for additional funds. The financial manager plans to issue preferred stock with a perpetual annual dividend of $5 per share and a par value of $30. If the required return on this stock is currently 20 percent, what should be the stock's market value?
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