1. Suppose dividends for XYZ company are projected to grow at 6% forever. If the discount rate is 16% and the current dividends is $2, what is the value of the stock? 2. Suppose ABC company's dividends grows at a 20% rate for the next 3 years. Thereafter, it grows at a 12% rate. What value would we place on ABC assuming a 15% discount rate? ABC's most recent dividends was $3. 3. Suppose RIC Company has a current book value of $10.85 per share. The most recent earnings per share were $2.96 and earnings are expected to grow at 6% forever. The appropriate discount rate is 8.2%. Assume the clean surplus relationship is true. Assuming the company maintains a constant retention ratio, what is the value of the company according to the residual income model if there are no dividends? 4. The table below contains information about SIM's company. Provide expected share prices using each of the three price ratio approaches we have discussed. Price ratio analysis for SIMS company (Current stock price: $40) Sales Earnings Cash Flow Five-year average price ratio 25 (PE) 7 (PCF) 1.5 (PS) Current Vale per share 52 (EPS) 56 (CFPS) 530 (SPS) Growth Rate 10% 16% 14% 5. Lenon's company has a book value per share of $6.42 and current earnings per share of $1.31. The required return on Lenon's stock is 16 percent and the expected earnings growth rate is 7 percent. What is one share of this stock worth today? 6. Currently, Major Industries of Ohio has sales of $3.4 million, net profit of $268 thousand, and 400 thousand shares of stock outstanding. The sales and net profit are each expected to grow by 7.5 percent annually. The historical P/S ratio is 8.5. What is the expected price of this stock one year from now? 7. Magnolia Farms has 125,000 shares of stock outstanding. sales of $1.2 million, and net income of $152,000. Financial analysts have stated that the price-earnings ratio for this firm should be 15.5. Given this information, what should be the current stock price? 8. Jedstone Home Decors has net income of $26,000, total assets of $143,000, total liabilities of $54,000, and a price-book ratio of 4.3. There are 50,000 shares of stock outstanding. What is the firm's price-earnings ratio? 9. The West Wind Company has earnings per share of $2.20 and dividends per share of $1.21. The total equity of the firm is $970,000. There are 70,000 shares of stock outstanding. What is the sustainable rate of growth? 10. Dead Wood Planners has earnings per share of $1.36. The firm has $980,000 in equity and 125,000 shares of stock outstanding. What is the return on equity?