1. Suppose the company just paid dividend of $1. The dividends are expected to grow at 20% in Year 1 and 15% in Year 2. After that, the dividends will grow at a constant rate of 5% forever. If the required rate of return is 10%, compute today's price of the stock.
2. Suppose the company just paid dividend of $1. The dividends are expected to grow at 25% in Year 1 and 20% in Year 2, and 15% in Year 3. After that, the dividends will grow at a constant rate of 5% forever. If the required rate of return is 10%, compute today's price of the stock.
3. Suppose the company will not pay any dividends in Years 1 and 2. Suppose that the company pays dividend of $1 in Year 3 and after that the dividends will grow at 20% for the next two years. After that the dividends will grow at a constant rate of 5% forever. If the required rate of return is 10%, compute today's price of the stock.
4. ABC Company's last dividend was $3.7. 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 12%. What is its current stock price (i.e. solve for Po)?
5. A stock just paid a dividend of D0 = $1.5. The required rate of return is rs = 18.6%, and the constant growth rate is g = 4.6%. What is the current stock price?
6. The common stock of ABC Industries is valued at $31.2 a share. The company increases their dividend by 11 percent annually and expects their next dividend to be $1.6. What is the required rate of return on this stock? That is, solve for r.
7. If D1 = $2, g (which is constant) = 2.4%, and P0 = $70.4, what is the required rate of return on the stock? That is, solve for r.
8. If D0 = $2.8, g = 3.2%, and P0 = $79.4, what is the required rate of return on the stock? That is, solve for r.
9. ABC just paid a dividend of D0 = $4.3. Analysts expect the company's dividend to grow by 30% this year, by 22% in Year 2, and at a constant rate of 7% in Year 3 and thereafter. The required return on this stock is 14%. What is the best estimate of the stock's current market value?
10. ABC is expected to pay a dividend of $3.2 per share at the end of the year. The stock sells for $117 per share, and its required rate of return is 18.6%. The dividend is expected to grow at some constant rate, g, forever. What is the growth rate (i.e. solve for g)?
11. ABC's last dividend was $3.4. The dividend growth rate is expected to be constant at 27% for 3 years, after which dividends are expected to grow at a rate of 7% forever. If the firm's required return (rs) is 16%, what is its current stock price (i.e. solve for Po)?
12. ABC's stock has a required rate of return of 14.7%, and it sells for $28 per share. The dividend is expected to grow at a constant rate of 7.2% per year. What is the expected year-end dividend, D1?
13. ABC's last dividend paid was $1.4, its required return is 18.7%, its growth rate is 3.3%, 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?
14. ABC Enterprises' stock is currently selling for $68.4 per share. The dividend is projected to increase at a constant rate of 5.8% 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)?
15. The common stock of Wetmore Industries is valued at $54 a share. The company increases their dividend by 5.8 percent annually and expects their next dividend to be $4.5. What is the required rate of return on this stock? That is, solve for r.
16. 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 5.2% per year. The required rate of return on the stock is 17.6%. What is the stock's expected price 3 years from today (i.e. solve for P3)?
17. ABC Inc., is expected to pay an annual dividend of $0.3 per share next year. The required return is 12.7 percent and the growth rate is 6 percent. What is the expected value of this stock five years from now?
18. If D1 = $4.35 and P0 = $63.37, what is the dividend yield?
19. A stock is expected to pay a dividend of $1.6 at the end of the year. The required rate of return is rs = 12.5%, and the expected constant growth rate is g = 6.9%. What is the stock's current price?