1. Antiques R Us is a mature manufacturing firm. The company just paid a $6 dividend, but management expects to reduce the payout by 5 percent per year indefinitely.

Required :

If you require a 10 percent return on this stock, what will you pay for a share today?

A. $38.38

B. $37.62

C. $40.00

D. $114.00

E. $38.00

2. Far Side Corporation is expected to pay the following dividends over the next four years: $11, $9, $7, and $3. Afterward, the company pledges to maintain a constant 7 percent growth rate in dividends forever.

Required:

If the required return on the stock is 15 percent, what is the current share price? (Do not round your intermediate calculations.)

A. $45.63

B. $44.41

C. $47.00

D. $43.35

E. $52.64

3. Metroplex Corporation will pay a $2.60 per share dividend next year. The company pledges to increase its dividend by 7.60 percent per year indefinitely.

Required:

If you require an 13.90 percent return on your investment, how much will you pay for the company's stock today?

A. $39.62

B. $41.27

C. $42.92

D. $38.35

E. $11.24