1. Winter Time Adventures is going to pay an annual dividend of $2.50 a share on its common stock next week. This year, the company paid a dividend of $2.40 a share. The company adheres to a constant rate of growth dividend policy. What will one share of this common stock be worth 10 years from now if the applicable discount rate is 8.0 percent?
$98.51
$98.10
$94.17
$90.69
$106.10
2. The risk-free rate of return is 4 percent and the market risk premium is 10 percent. What is the expected rate of return on a stock with a beta of 1.28?
12.80
9.12
13.12
16.80
17.92