1. Kangaroo Inc. stock sells for $80. The next dividend will be $4 per share. If the rate of return earned on reinvested funds is a constant 26% and the company reinvests 60% of earnings in the firm, what must be the discount rate?
2. Quokka Co. will pay a year-end dividend of $2.80 per share. Investors expect that the dividend will grow at a rate of 2.8% indefinitely. If the stock currently sells at a price of $22 per share, what is the expected rate of return for the stock?
3. Platypus Co. pays a dividend of $1.80 every 6-months. The dividend yield on the stock is reported to be 6.2%. What price is the stock selling at?