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##### Question 1 If last dividend = $6, g = 6.4%, a...

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Question 1 If last dividend = $6, g = 6.4%, and P0 = $69.3, what is the stock?s expected total return for the coming year? Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box. Answer . Question 2 ABC Inc., is expected to pay an annual dividend of $0.3 per share next year. The required return is 15.4 percent and the growth rate is 4.7 percent. What is the expected value of this stock five years from now? Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box. Answer . Question 3 ABC Enterprises' stock is currently selling for $50.4 per share. The dividend is projected to increase at a constant rate of 7.3% per year. The required rate of return on the stock is 12%. What is the stock's expected price 5 years from today (i.e. solve for P5)? Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box. Answer . Question 4 A stock just paid a dividend of $3. The required rate of return is 16.5%, and the constant growth rate is 3.2%. What is the current stock price? Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box. Answer . Question 5 ABC just paid a dividend of D0 = $4.9. Analysts expect the company's dividend to grow by 30% this year, by 22% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this stock is 12%. What is the best estimate of the stock?s current market value? Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box. Answer . Question 6 ABC's stock has a required rate of return of 13%, and it sells for $74 per share. The dividend is expected to grow at a constant rate of 4.7% per year. What is the expected year-end dividend, D1? Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box. Answer . Question 7 A stock is expected to pay a dividend of $1.8 at the end of the year. The required rate of return is rs = 11.7%, and the expected constant growth rate is g = 6.9%. What is the stock's current price? Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box. Answer . Question 8 ABC is expected to pay a dividend of $1 per share at the end of the year. The stock sells for $107 per share, and its required rate of return is 13.2%. The dividend is expected to grow at some constant rate, g, forever. What is the growth rate (i.e. solve for g)? Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box. Answer . Question 9 If D1 = $4.86, g (which is constant) = 2%, and P0 = $81.65, what is the stock?s expected dividend yield for the coming year? Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box. Answer . Question 10 ABC Company's last dividend was $0.7. The dividend growth rate is expected to be constant at 28% for 2 years, after which dividends are expected to grow at a rate of 6% forever. The firm's required return (rs) is 16%. What is its current stock price (i.e. solve for Po)? Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box. Answer . Question 11 If D1 = $6.1, g (which is constant) = 2.9%, and P0 = $76.4, what is the stock?s expected total return for the coming year? Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box. Answer . Question 12 The common stock of Connor, Inc., is selling for $85 a share and has a dividend yield of 2.8 percent. What is the dividend amount? Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box. Answer . Question 13 The common stock of Wetmore Industries is valued at $54.8 a share. The company increases their dividend by 4.6 percent annually and expects their next dividend to be $4.5. What is the required rate of return on this stock? Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box. Answer . Question 14 A stock just paid a dividend of D0 = $2.4. The required rate of return is rs = 17.7%, and the constant growth rate is g = 3.6%. What is the current stock price? Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box. Answer . Question 15 ABC?s last dividend paid was $1.1, its required return is 12.4%, its growth rate is 3.6%, and its growth rate is expected to be constant in the future. What is Sorenson's expected stock price in 7 years, i.e., what is P7? Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box. Answer . Question 16 ABC's last dividend was $3.2. The dividend growth rate is expected to be constant at 20% for 3 years, after which dividends are expected to grow at a rate of 6% forever. If the firm's required return (rs) is 12%, what is its current stock price (i.e. solve for Po)? Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box. Answer . Question 17 A stock's next dividend is expected to be $1.7. The required rate of return on stock is 16.8%, and the expected constant growth rate is 7.1%. What is the stock's current price? Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box. Answer . Question 18 ABC Enterprises' stock is expected to pay a dividend of $1.9 per share. The dividend is projected to increase at a constant rate of 8.9% per year. The required rate of return on the stock is 15.6%. What is the stock's expected price 3 years from today (i.e. solve for P3)? Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box. Answer

Paper#6991 | Written in 18-Jul-2015

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