1. 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?
2. The current book value per share of Dollar Generals is $7.35 and the required return on the stock is 15 5 percent. The firm expects earnings per share of $3.5 next year with annual earnings growth of 6.5 percent. What is the current market value of this stock?