1- The last dividend paid by LSP Company was $1.00. LSPs growth rate is expected to be a constant 5 percent for 2 years, after which dividends are expected to grow at a rate of 10 percent forever. LSPs required rate of return on equity (Rs) is 12 percent. What is the current price of LSPs common stock? *

a) $21.00

b) $33.33

c) $42.25

d) $50.16

e) None of the above

2-

Jamal Inc.s most recent dividend was $2.40 per share (D0 = $2.40). The dividend is expected to grow at a rate of 6 percent per year. The risk-free rate is 5 percent and the return on the market is 9 percent. If the companys beta is 1.3, what is the price of the stock today? *

a) $72.14

b) $60.57

c) $40.00

d) $68.06

e) None of the above

3-

A stock is expected to pay a dividend of $0.50 at the end of the year (i.e., D1 = 0.50). Its dividend is expected to grow at a constant rate of 9 percent a year, and the stock has a required return of 12 percent. What is the expected price of the stock four years from today? *

a) $ 5.46

b) $ 10

c) $13.11

d) $12.25

e) None of the above

4-

A stock that currently trades for $40 per share is expected to pay a year-end dividend of $2 per share. The dividend is expected to grow at a constant rate over time. The stock has a beta of 1.2, the risk-free rate is 5 percent, and the market risk premium is 5 percent. What is the stocks expected price seven years from today? *

a) $ 56.26

b) $ 58.01

c) $ 83.05

d) $ 60.15

e) None of the above