1.

E-Eyes.com has a new issue of preferred stock it calls 20/20 preferred. The stock will pay a $20 dividend per year, but the first dividend will not be paid until 20 years from today. |

Required: |

If you require a return of 9.00 percent on this stock, how much should you pay today? |

Current stock price | $ |

2.

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next eight years, because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $14.00 per share 9 years from today and will increase the dividend by 5.75 percent per year thereafter. |

Required: |

If the required return on this stock is 13.75 percent, what is the current share price? |

Current share price | $ |

3.

Apocalyptica Corporation is expected to pay the following dividends over the next four years: $5.80, $16.80, $21.80, and $3.60. Afterwards, the company pledges to maintain a constant 5.75 percent growth rate in dividends, forever. |

Required: |

If the required return on the stock is 8 percent, what is the current share price? |

Current share price | $ |

4.

ang Corp. is growing quickly. Dividends are expected to grow at a rate of 31 percent for the next three years, with the growth rate falling off to a constant 7.1 percent thereafter. |

Required: |

If the required return is 12 percent and the company just paid a $2.55 dividend, what is the current share price? ( |

Current share price | $ |

5.

Gontier Corporation stock currently sells for $64.18 per share. The market requires a return of 12 percent on the firm’s stock. |

Required: |

If the company maintains a constant 5.75 percent growth rate in dividends, what was the most recent dividend per share paid on the stock? |

Dividend per share | $ |

6.

Davis, Inc., currently has an EPS of $2.01 and an earnings growth rate of 8 percent. The benchmark PE ratio is 24. |

Required: |

What is the target share price in 6 years? |

Projected stock price | $ |

7.

Sully Corp. currently has an EPS of $2.51, and the benchmark PE ratio for the company is 21. Earnings are expected to grow at 6 percent per year. |

Requirement 1: |

What is your estimate of the current stock price? |

Stock price | $ |

Requirement 2: |

What is the target stock price in one year? |

Stock price in one year | $ |

Requirement 3: |

Assuming that the company pays no dividends, what is the implied return on the company's stock over the next year? |

Implied return | % |

.

Subject | Business |

Due By (Pacific Time) | 08/04/2014 04:00 pm |

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