Question 1. Computerplus company already paid a $6 dividend per share this year and expects dividends to grow 10% annually for the next four years and 7% annually thereafter. Compute the Price of the companies stock (Note: the required rate of return on this stock is 11%).
Question 2. The chairman of World Food Corporation announced that the firm's dividends will grow at a rate of 18% for the next three years, and that thereafter the annual rate of growth is expected to be only 6%. The annual dividend per share is estimated to be $4 in the next year. If a required rate of return of 15% is assumed, what is the highest price you are willing to pay for a share of World Food Corporation's common stock?
Question 3. The last dividend paid by stock A was $2 per share. With a 9% required rate of return, calculate the market value of this stock if the company has no growth in the future.