1) NCAAB Co. paid a dividend of $2 (D0) last year on earnings of $4 (E0). Dividends are expected to grow at a constant sustainable level of growth of 4% (g) per year. The equity discount rate for the firm is 10%. What is intrinsic value of NCAAB Co.'s shares?

a. $41.54

b. $20.20

c. $69.33

d. $34.67

e. $53.12

2) The market expected return or discount rate is 8% on each of two stocks, A and B. Stock A and B are both expected to pay a dividend of $2 (D1) in the upcoming year. The expected growth rate of dividends (g) is 4% for Stock A and 5% for Stock B. Using the constant-growth DDM, the intrinsic value of stock A _________.

a. the answer cannot be determined from the information given

b. will be higher than the intrinsic value of stock B, except in year 1

c. will be the same as the intrinsic value of stock B

d. will be higher than the intrinsic value of stock B

e. will be less than the intrinsic value of stock B

3) Taipan Trading Company is a mature company that had an EPS of $6 last year (E0). The expected ROE is 14%. An appropriate required return on the stock is 12%. If the firm has a plowback ratio of 80% (or a payout ratio of 20%), its intrinsic value assuming it constantly grows dividends at its sustainable rate should be _________.

a. $22.35

b. $69.77

c. $750.00

d. $834.00

e. $166.75