1. Houston Inc. is planning to pay a dividend of $2.82 per share next year. The company promises to increase its dividend by 3 percent per year indefinitely. If you require a return of 10 percent on your investment, how much will you pay for the companys stock today?

2. Sabita, Inc., will pay $1.60 per share next year. The dividends are anticipated to maintain a growth rate of 6 percent forever. The stock currently sells for $30 per share. a. What is the dividend yield? b. What is the expected capital gains yield?

3. Global Tech Co. plans to maintain a constant 4.8 percent growth rate in its dividends indefinitely. If the company has a dividend yield of 6.6 percent, what is the required return on the companys stock?