1. Royal Bank common shares pay dividends annually. They just paid a $1.50 dividend. Stock holders require a return of 12%. Royal is expected to continue paying dividends that will grow at 3.5% per annum in perpetuity. What is the fair price of a share of Royal Bank Stock?
2. If the price of Hanbags Inc. stock is $43, its required return is 20% and the last dividend paid was $3, what is its dividend growth rate?
3. Universal's preferred shares pay a 6.5% annual dividend on a $50 - par value. The next dividend is due in one year. The required return of preferred shareholders is 9%. What is the fair price for the preferred shares?