1) i) A stock will pay constant dividends of $9 every year. Its required rate of return (a.k.a., cost of capital, discount rate) is 17%. What is the value of the stock? Round to the penny.
ii) A stock just paid a dividend of $4, and dividends will increase by 7% every year. Its required rate of return is 12%. What is the value of the stock? Round to the penny.
iii) A stock will pay a dividend of $7 in one year and increase 3% every year after that. Its required rate of return is 13%. What is the value of the stock? Round to the penny.
iv) Which of the following is NOT a source of cash to a stockholder?
a) Value of the stock when sold back to the company
b) Net working capital per share
c)Value of the stock when sold to another investor
d) Dividends