ALL OWRK MUST BE SHOWN AND THE FORMULA THAT YOU USED.

(1) A stock just paid a dividend of $2.50 (D_{0} = $2.50). The required rate of return is 4% (R = 4%), and the constant growth rate is 2.0% (g = 2.0%). What is the current stock price?

(2) ABC Inc. is expected to pay a dividend of $3.75 in the coming year (D_{1} = $3.75). The company will increase its dividend payment at a growth rate of 5 percent every year indefinitely (g = 5.0%). If the required rate of return on the stock is 8%, what is the current value of the company’s stock?

(1) Francis Inc.'s stock has a required rate of return of 8.0%, and it sells for $105 per share. The dividend is expected to grow at a constant rate of 4.0% per year. What is the expected year-end dividend, D_{1}?

(2) Goode Inc.'s stock has a required rate of return of 10%, and it sells for $100 per share. Goode's dividend is expected to grow at a constant rate of 5%. What was the last dividend, D_{0}?

(1) Moolen Inc. has an outstanding issue of perpetual preferred stock with an annual dividend of $6 per share. If the required return on this preferred stock is 12%, at what price should the stock sell?

(2) WhiteEd Inc.'s stock currently sells for $100 per share. The dividend is projected to increase at a constant rate of 2.5% per year. The required rate of return on the stock, R, is 4.5%. What is the stock's expected price 3 years from now?

(1) Battles, Inc. just paid an annual dividend of $2.00 a share. The dividend will increase by 20 percent for the next two years and then increase by 2.5 percent annually thereafter. What is the present value of this stock at a discount rate of 9 percent?

(1) If ABC’s expected dividend payment in the coming year will be $4.25 (D_{1} = $4.25), the dividend growth rate, g (which is constant) = 2.5%, and its current stock price, P_{0} = $135.00, what is the stock’s expected dividend yield for the coming year?

(2) If D_{0} = $1.75, g (which is constant) = 5.0%, and P_{0} = $45.00, what is the stock’s expected total return for the coming year?

(3) Gay Manufacturing is expected to pay a dividend of $2.50 per share at the end of the year (D_{1} = $2.50). The current stock price is $80 per share, and its required rate of return is 6%. The dividend is expected to grow at some constant rate, g, forever. What is the dividend growth rate?

Subject | Business |

Due By (Pacific Time) | 03/06/2015 08:00 am |

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