1. A). Pic-A-Shoes stock currently sells for $40. The stock just paid a dividend of $1.25; that is, D0 = $1.25. The dividend is expected to grow at a constant rate of 8% a year. What stock price is expected 1 year from now? Round your answer to the nearest cent.

1 B) What is the required rate of return? Round your answer to two decimal places.

2. A stock is trading at $60 per share. The stock is expected to have a year-end dividend of $3 per share (D₁ = $3), and it is expected to grow at some constant rate g_L throughout time. The stock's required rate of return is 12% (assume the market is in equilibrium with the required return equal to the expected return). What is your forecast of g_L? Do not round intermediate calculations. Round the answer to two decimal places.

3.

Nick's Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $4 at the end of each year. The preferred sells for $60 a share. What is the stock's required rate of return? (Assume the market is in equilibrium with the required return equal to the expected return.) Round the answer to two decimal places.

4.

A company currently pays a dividend of $1.6 per share (D₀ = $1.6). It is estimated that the company's dividend will grow at a rate of 25% per year for the next 2 years, and then at a constant rate of 8% thereafter. The company's stock has a beta of 1.8, the risk-free rate is 8%, and the market risk premium is 3.5%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.