1) The next dividend payment by Dizzle, Inc., will be $3.35 per share. The dividends are anticipated to maintain a growth rate of 2.50 percent, forever. If the stock currently sells for $50.30 per share, what is the required return? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
2) Burkhardt Corp. pays a constant $13.30 dividend on its stock. The company will maintain this dividend for the next seven years and will then cease paying dividends forever.
If the required return on this stock is 10 percent, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
3) Smiling Elephant, Inc., has an issue of preferred stock outstanding that pays a $4.60 dividend every year, in perpetuity.
If this issue currently sells for $79.90 per share, what is the required return?
4) Apocalyptica Corporation is expected to pay the following dividends over the next four years: $5.30, $16.30, $21.30, and $3.10. Afterward, the company pledges to maintain a constant 5.75 percent growth rate in dividends, forever.
If the required return on the stock is 8 percent, what is the current share price?
5) Burton Corp. is growing quickly. Dividends are expected to grow at a rate of 29 percent for the next three years, with the growth rate falling off to a constant 7.8 percent thereafter
If the required return is 15 percent and the company just paid a dividend of $3.65, what is the current share price? (Hint: Calculate the first four dividends.)
6) Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years, because the firm needs to plow back its earnings to fuel growth. The company will then pay a dividend of $13.25 per share 10 years from today and will increase the dividend by 5 percent per year thereafter.
If the required return on this stock is 13 percent, what is the current share price?