1. Assume that a firm is using the residual dividend policy. The firm’s capital budget is $200 million. The optimal capital structure is 40% debt and 60% equity. The firm’s forecasted income is $150 million. If the firm has 10 million shares, what is the dividend per share the firm should pay?
2. CX Enterprises has the following expected? dividends: $ 1.14 in one? year, $ 1.21 in two? years, and $ 1.31 in three years. After? that, its dividends are expected to grow at 4.4 % per year forever? (so that year? 4's dividend will be 4.4 % more than $ 1.31 and so? on). If? CX's equity cost of capital is 12.2 %?, what is the current price of its? stock?
The price of the stock will be ?$............. ?(Round to the nearest? cent.)