1. Miller's Farm has 120,000 shares of stock outstanding, sales of $850,000, and net income of $55,000. Financial analysts believe the price-earnings ratio for this firm should be 15.8. Given this information, what should be the current stock price?
A. $7.24 B. $8.87 C. $14.85 D. $14.57 E. $15.21
2. Leslie Apparel has a current book value per share of $5.15 and current earnings per share of $1.13. The required return is 14 percent and the expected earnings growth rate is 4.5 percent. What is one share of this stock worth today?
A. $7.44
B. $8.77
C. $9.99
D. $10.65
E. $11.13
3. Ultra Fine Furnishings is in the process of selling its peripheral businesses and focusing on its upscale clients. In conjunction with this reorganization, the dividend will be decreased by 10 percent for the next three years. After that, the dividend will resume increasing at an annual rate of 5 percent. The required return on this stock is 14 percent and the last dividend paid was $2.40 a share. What is one share of this stock worth today?
A. $17.34
B. $18.08
C. $18.35
D. $19.68
E. $20.72
4. Wilkinson and Daughters has net income of $415,400, total assets of $2.2 million, and total liabilities of $1.08 million. The company paid $270,000 in dividends. What is the firm's sustainable rate of growth?
A. 9.69 percent
B. 11.06 percent
C. 12.98 percent
D. 13.93 percent
E. 14.15 percent
5. The common stock of JL Recyclers has a required return of 12 percent and a current value of $18.72. The company pays its dividend annually and increases the amount by 4 percent each year. You own 300 shares of this stock. What was the total amount of the last dividend you received?
A. $319
B. $360
C. $432
D. $480
E. $513
6. A stock sells for $12.36 a share and has a required return of 9 percent. Dividends are paid annually and increase at a constant 3 percent per year. What is the amount of the last dividend paid?
A. $0.46
B. $0.50
C. $0.59
D. $0.63
E. $0.72