1. A firm is expected to pay dividend of $2.55 next year and $2.70 the following year. Financial analysts believe the stock will be a their price target of $40 in 2 years. Compute the value of this stock it a required return of 12.5 percent.
2. What annual rate of return is implied on a $2,500 loan taken next year when $5,625 must be repaid in year 6? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
3. A firm is expected to pay dividend of $3.95 next year and $4.25 the following year. Financial analysts beleve the stock will be a their price target of $120 in 2 years. Compute the value of this stock ith a required return of 13.9 percent.