1. Suppose a stock is expected to pay a $2.60 dividend every year in perpetuity and the required return is 9.5% with annual compounding. What is the price of this stock?

$25.87

$27.37

$19.50

$24.83

2. Suppose a stock is expected to pay a $0.50 dividend every year for the next 1,000 years. The required return is 10% with annual compounding. What is the price of this stock?

$5

$5.50

$0.05

$15.00

3. Suppose a stock is expected to pay a $0.95 dividend monthly (in perpetuity) and the required rate of return is 13% (annual) with monthly compounding. What is the price of the stock?

$8.26

$7.31

$87.69

$27.27