1. New COM Inc. dividends have been growing at 6%, and this growth rate is expected to continue indefinitely. If the company just paid a dividend of $2.00 and its stock is selling at $30.00 per share, what is the required rate of return?
2. Bozo Inc. has a 10% coupon bond outstanding with 12 years to maturity. The bond makes semiannual coupon payments and is selling in the market for $966.33. It is issuing a new 12-year bond to finance a factory to make new Bozos. The new bond will also make semiannual coupon payments. What coupon rate should be set for this new bond if the company wants to sell it at par (i.e. for $1,000)?
3. Cod Oil Inc. plans to pay an annual dividend of $2.50 per share indefinitely. If you require a 12.5 percent rate of return, how much is this stock worth to you?