1) Sky High Co. just paid a dividend of $2.0 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year indefinitely. If investors require an 15.4 percent return on Sky High Co. stock:

what is the current price ?

CAN USE THE FOLLOWING FORMLA ---> P₀ = D₁ / (r - g)

2) Sky High Co. just paid a dividend of $4.0 per share on its stock (D₀). The dividends are expected to grow at a constant rate of 4 percent per year indefinitely. If investors require an 13.3 percent return on Sky High Co. stock.

what is the stock price in 3 years?

See the constant dividend growth model.

P_t = D_t+1 / (r - g)

3) Pine Grove, Inc., is a thriving young company and it expects no dividends over the next 3 years because the company needs to reinvest its earnings to fund its various projects. The company will pay a $5.7 per share dividend in 4 years and will increase the dividend by 7 percent per year thereafter. If the required return on this stock is 11.9 percent:

what is the current share price ?

USE THE FOLLOWING INFO : ----> P_t = D_t+1 / (r-g); we know D_4. Thus find P₃ first and then discount P₃ back to PV.

THIS PROBLEMS ARE FOR MANAGERIAL FINANCE MBA CLASS.