1. Forever 21 is expected to pay an annual dividend of $3.35 per share in one year, which is then expected to grow by 3% per year. The required rate of return is 14%.

What is the current stock price?

2. Walmart has just paid an annual dividend of $3.3. Dividends are expected to grow by 7% for the next 4 years, and then grow by 3% thereafter. Walmart has a required return of 12%.

What is the expected dividend in four years?

What is the terminal value in four years (P4P4)?

What is the value of the stock now?

3. Roller Inc. has just paid an annual dividend of $0.85. Analysts expect dividends to grow by 7% per year for the next 9 years, and then by 3% per year thereafter. The company has a required return of 12%.

What should be the current stock price?

4. We know the following expected returns for stocks A and B, given different states of the economy:

State (s)	Probability	E(rA,s)	E(rB,s)
Recession	0.2	-0.1	0.04
Normal	0.5	0.08	0.05
Expansion	0.3	0.19	0.07

What is the expected return for stock A?

5. Nautilus Clothing's stock has a 40% chance of producing a 15% return, a 20% chance of producing a 19% return, and a 40% chance of producing a -7% return.

What is the firm's expected return?