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Question;63. Show Boat Dinner Theatres has paid annual;dividends of $0.32, $0.48, and $0.60 a share over the past three years;respectively. The company now predicts that it will maintain a constant;dividend since its business has leveled off and sales are expected to remain;relatively flat. Given the lack of future growth, you will only buy this stock;if you can earn at least a 16 percent rate of return. What is the maximum;amount you are willing to pay for one share of this stock today?;A. $3.43;B. $3.75;C. $4.43;D. $4.69;E. $4.82;64. The common stock of Auto Deliveries sells for;$28.16 a share. The stock is expected to pay $1.35 per share next year when the;annual dividend is distributed. The firm has established a pattern of increasing;its dividends by 3 percent annually and expects to continue doing so. What is;the market rate of return on this stock?;A. 7.42 percent;B. 7.79 percent;C. 19.67 percent;D. 20.14 percent;E. 20.86 percent;65. The current dividend yield on Clayton's Metals;common stock is 2.5 percent. The company just paid a $1.48 annual dividend and;announced plans to pay $1.54 next year. The dividend growth rate is expected to;remain constant at the current level. What is the required rate of return on;this stock?;A. 6.55 percent;B. 6.82 percent;C. 7.08 percent;D. 7.39 percent;E. 7.75 percent;66. Northern Gas recently paid a $2.80 annual dividend;on its common stock. This dividend increases at an average rate of 3.8 percent;per year. The stock is currently selling for $26.91 a share. What is the market;rate of return?;A. 13.88 percent;B. 14.03 percent;C. 14.21 percent;D. 14.37 percent;E. 14.60 percent;67. Denver Shoppes will pay an annual dividend of;$1.46 a share next year with future dividends increasing by 4.2 percent;annually. What is the market rate of return if the stock is currently selling;for $38.90 a share?;A. 6.55 percent;B. 7.13 percent;C. 7.46 percent;D. 7.95 percent;E. 8.29 percent;68. Great Lakes Health Care common stock offers an expected;total return of 9.2 percent. The last annual dividend was $2.10 a share.;Dividends increase at a constant 2.6 percent per year. What is the dividend;yield?;A. 3.75 percent;B. 4.20 percent;C. 4.55 percent;D. 5.25 percent;E. 6.60 percent;69. Electronics, Inc. common stock returned a nifty;22.68 percent rate of return last year. The dividend amount was $0.25 a share;which equated to a dividend yield of 0.84 percent. What was the rate of price;appreciation for the year?;A. 21.84 percent;B. 22.38 percent;C. 22.60 percent;D. 22.87 percent;E. 23.52 percent;70. Roy's Welding Supplies common stock sells for $38;a share and pays an annual dividend that increases by 3 percent annually. The;market rate of return on this stock is 8.20 percent. What is the amount of the;last dividend paid?;A. $1.80;B. $1.86;C. $1.92;D. $1.98;E. $2.10;71. Douglass Gardens pays an annual dividend that is;expected to increase by 4.1 percent per year. The stock commands a market rate;of return of 12.6 percent and sells for $24.90 a share. What is the expected;amount of the next dividend?;A. $2.03;B. $2.12;C. $3.17;D. $2.20;E. $2.28;72. Atlas Mines has adopted a policy of increasing the;annual dividend on its common stock at a constant rate of 2.75 percent annually.;The firm just paid an annual dividend of $1.67. What will the dividend be six;years from now?;A. $1.88;B. $1.92;C. $1.97;D. $2.02;E. $2.05;73. A stock pays a constant annual dividend and sells;for $56.10 a share. If the market rate of return on this stock is 15.85;percent, what is the amount of the next annual dividend?;A. $7.67;B. $7.94;C. $8.21;D. $8.89;E. $10.30;74. You want to purchase some shares of Green World;stock but need a 15 percent rate of return to compensate for the perceived risk;of such ownership. What is the maximum you are willing to spend per share to;buy this stock if the company pays a constant $0.90 annual dividend per;share?;A. $5.40;B. $6.00;C. $6.90;D. $7.20;E. $7.80;75. Home Canning Products common stock sells for;$44.96 a share and has a market rate of return of 12.8 percent. The company;just paid an annual dividend of $1.04 per share. What is the dividend growth;rate?;A. 8.29 percent;B. 8.45 percent;C. 9.23 percent;D. 9.67 percent;E. 10.25 percent;76. Winter Time Adventures is going to pay an annual;dividend of $2.86 a share on its common stock next year. This year, the company;paid a dividend of $2.75 a share. The company adheres to a constant rate of;growth dividend policy. What will one share of this common stock be worth five;years from now if the applicable discount rate is 11.7 percent?;A. $43.45;B. $43.87;C. $44.15;D. $45.19;E. $47.00;77. Hightower Pharmacy just paid a $3.10 annual;dividend. The company has a policy of increasing the dividend by 3.8 percent;annually. You would like to purchase 100 shares of stock in this firm but;realize that you will not have the funds to do so for another four years. If;you require a 16 percent rate of return, how much will you be willing to pay;per share for the 100 shares when you can afford to make this investment?;A. $29.50;B. $30.62;C. $31.12;D. $31.78;E. $32.47;78. National Warehousing just announced it is;increasing its annual dividend to $1.18 next year and establishing a policy;whereby the dividend will increase by 3.25 percent annually thereafter. How;much will one share of this stock be worth 8 years from now if the required;rate of return is 9.5 percent?;A. $24.38;B. $25.68;C. $26.51;D. $27.02;E. $27.37;79. Shares of Hot Donuts common stock are currently;selling for $32.35. The last annual dividend paid was $1.10 per share and the;market rate of return is 10.7 percent. At what rate is the dividend;growing?;A. 7.06 percent;B. 8.67 percent;C. 10.42 percent;D. 12.60 percent;E. 14.10 percent;80. Combined Communications is a new firm in a rapidly;growing industry. The company is planning on increasing its annual dividend by;15 percent a year for the next 4 years and then decreasing the growth rate to;3.5 percent per year. The company just paid its annual dividend in the amount;of $0.20 per share. What is the current value of one share of this stock if the;required rate of return is 15.5 percent?;A. $1.82;B. $2.04;C. $2.49;D. $2.71;E. $3.05;81. KL Airlines paid an annual dividend of $1.42 a;share last month. The company is planning on paying $1.50, $1.75, and $1.80 a;share over the next 3 years, respectively. After that, the dividend will be;constant at $2 per share per year. What is the market price of this stock if;the market rate of return is 10.5 percent?;A. $15.98;B. $16.07;C. $18.24;D. $21.16;E. $24.10;82. Renew It, Inc., is preparing to pay its first;dividend. It is going to pay $0.45, $0.60, and $1 a share over the next three;years, respectively. After that, the company has stated that the annual;dividend will be $1.25 per share indefinitely. What is this stock worth to you;per share if you demand a 10.8 percent rate of return on stocks of this;type?;A. $6.67;B. $8.21;C. $10.14;D. $11.47;E. $12.03;83. Diets For You announced today that it will begin;paying annual dividends next year. The first dividend will be $0.12 a share.;The following dividends will be $0.15, $0.20, $0.50, and $0.60 a share annually;for the following 4 years, respectively. After that, dividends are projected to;increase by 4 percent per year. How much are you willing to pay to buy one;share of this stock today if your desired rate of return is 8.5 percent?;A. $9.67;B. $9.94;C. $10.38;D. $10.50;E. $10.86;84. Crystal Glass recently paid $3.60 as an annual;dividend. Future dividends are projected at $3.80, $4.10, and $4.25 over the;next 3 years, respectively. Beginning 4 years from now, the dividend is;expected to increase by 3.25 percent annually. What is one share of this stock;worth to you if you require a 12.5 percent rate of return on similar;investments?;A. $42.92;B. $43.40;C. $45.12;D. $45.88;E. $46.50;85. Langley Enterprises pays a constant dividend of;$0.60 a share. The company announced today that it will continue to pay the dividend;for another 2 years after which time all dividends will cease. What is one;share of this stock worth today if the required rate of return is 16.5;percent?;A. $0.92;B. $0.96;C. $1.04;D. $1.09;E. $1.20;86. Yesteryear Productions pays no dividend at the;present time. The company plans to start paying an annual dividend in the;amount of $0.40 a share for two years commencing four years from today. After;that time, the company plans on paying a constant $0.75 a share annual dividend;indefinitely. How much are you willing to pay to buy a share of this stock;today if your required return is 11.6 percent?;A. $3.78;B. $4.22;C. $4.37;D. $4.71;E. $4.98;87. Sweatshirts Unlimited is downsizing. The company;paid a $2.80 annual dividend last year. The company has announced plans to;lower the dividend by 25 percent each year. Once the dividend amount becomes;zero, the company will cease all dividends and go out of business. You have a;required rate of return of 15.5 percent on this particular stock given the;company's situation. What are your shares in this firm worth today on a per;share basis?;A. $5.19;B. $6.91;C. $8.68;D. $19.29;E. $22.11;88. Dexter Metals, paid its first annual dividend;yesterday in the amount of $0.18 a share. The company plans to double each;annual dividend payment for the next 3 years. After that time, it plans to pay;$1.25 a share for 2 years than then pay a constant dividend of $1.60 per share;indefinitely. What is one share of this stock worth today if the market rate of;return on similar securities is 10.24 percent?;A. $12.32;B. $12.77;C. $13.20;D. $14.26;E. $14.79;89. Marshall Arts Studios just paid an annual dividend;of $1.36 a share. The firm plans to pay annual dividends of $1.40, $1.46, and;$1.58 over the next 3 years, respectively. After that time, the dividends will;be held constant at $1.60 per share. What is this stock worth today at a 9;percent discount rate?;A. $14.08;B. $14.30;C. $16.67;D. $16.79;E. $17.46;90. Home Care Providers is paying an annual dividend;of $1.10 every other year. The last dividend was paid two years ago. The firm;will continue this policy until 3 more dividend payments have been paid. One;year after the last dividend normal payment, the company plans to pay a final;liquidating dividend of $40 per share. What is the current market value of this;stock if the required return is 17 percent?;A. $18.92;B. $20.74;C. $23.16;D. $24.14;E. $24.53;91. Last year, Hansen Delivery paid an annual dividend;of $3.20 per share. The company has been reducing the dividends by 10 percent;annually. How much are you willing to pay to purchase stock in this company if;your required rate of return is 11.5 percent?;A. $1.92;B. $7.87;C. $13.40;D. $21.16;E. $24.08;92. Beatrice Markets is expecting a period of intense;growth and has decided to retain more of its earnings to help finance that;growth. As a result, it is going to reduce its annual dividend by 30 percent a;year for the next 2 years. After that, it will maintain a constant dividend of;$2.50 a share. Last year, the company paid $3.60 as the annual dividend per;share. What is the market value of this stock if the required rate of return is;14.5 percent?;A. $14.63;B. $16.70;C. $18.08;D. $19.61;E. $21.23;93. Bonnie's Ice Cream is expecting its ice cream;sales to decline due to the increased interest in healthy eating. Thus, the;company has announced that it will be reducing its annual dividend by 2 percent;a year for the next five years. After that, it will maintain a constant dividend;of $2 a share. Last year, the company paid $2.20 per share. What is this stock;worth to you if you require a 9.5 percent rate of return?;A. $16.21;B. $17.48;C. $18.64;D. $19.09;E. $21.36;94. J&J Foods wants to issue some 7 percent;preferred stock that has a stated liquidating value of $100 a share. The;company has determined that stocks with similar characteristics provide a 12.8;percent rate of return. What should the offer price be?;A. $37.26;B. $41.38;C. $48.20;D. $54.69;E. $62.60;95. The preferred stock of Rail Lines, Inc., pays an;annual dividend of $7.50 and sells for $59.70 a share. What is the rate of;return on this security?;A. 10.38 percent;B. 11.63 percent;C. 12.56 percent;D. 12.72 percent;E. 12.84 percent;96. Marie owns shares of Deltona Productions preferred;stock which she says provides her with a constant 14.3 percent rate of return.;The stock is currently priced at $45.45 a share. What is the amount of the;dividend per share?;A. $6.00;B. $6.25;C. $6.50;D. $6.60;E. $7.00;97. Zylo, Inc. preferred stock pays a $7.50 annual;dividend. What is the maximum price you are willing to pay for one share of;this stock today if your required return is 9.75 percent?;A. $32.26;B. $35.48;C. $72.68;D. $76.92;E. $79.81;Essay Questions;98. What are the primary differences and similarities;between NASDAQ and the NYSE?

 

Paper#51096 | Written in 18-Jul-2015

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