1. Hurley's preferred stock pays a dividend of $1.25 per quarter. If the price of the stock is $65.00, what is its nominal (not effective) annual rate of return?
A. 1.25%
B. 5%
C. 7.69%
D. 11.11%
2. Berkshire Hathaway's stock has a required rate of return of 12.50%, and it sells for $125.00 per share. Berkshire's dividend is expected to grow at a constant rate of 8.00%. What was the last dividend, D0?
A. $2.55
B. $5.21
C. $6.89
D. $8.85
3. Berkshire's free cash flow was just FCF0 = $1.50 Million. Analysts expect the company's free cash flow to grow by 25% this year, by 15% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The WACC for this company 10.00%. The Horizon Value for Berkshire is: ___________.
A. $26.19 Million
B. $45.28 Million
C. $59.90 Million
D. $100.75 Million