1. MP Incorporated has paid annual dividends of $1.40, $1.75, and $2.10 a share over the past three years, respectively. The company now predicts that it will maintain a constant dividend since its business has leveled off and sales are expected to remain relatively constant. Given the lack of future growth, you wil only buy this stock if you can earn at least a 12% rate of return. What is the maximum amount you are willing to pay to buy one share of this stock today?

a. $10.00

b. $13.33

c. $16.67

d. $17.50

2. What is the maximum price per share of Bell Corporation's stock you would pay if the company pays a constant dividend of $3.40 annually per share and you expect a 12.5% return on investments?

a. $26.04

b. $26.87

c. $28.29

d. $27.20

3. A marketing study would be factored into the cash flows used for project analysis.

True

False