1. The next dividend payment by Savitz, Incorporated, will be $2.15 per share. The dividends are anticipated to maintain a growth rate of 2 percent forever. If the stock currently sells for $53 per share, what is the required return?

Multiple Choice 5.94% 6.06% 4.06% 5.75% 2.00%

2. The Jackson-Timberlake Wardrobe Company just paid a dividend of $1.24 per share on its stock. The dividends are expected to grow at a constant rate of 7 percent per year indefinitely.

a. If investors require a return of 14 percent on the company's stock, what is the current price?

b. What will the price be in 8 years?

3. Red, Incorporated, Yellow Corporation, and Blue Company each will pay a dividend of $2.15 next year. The growth rate in dividends for all three companies is 4 percent. The required return for each company's stock is 8.20 percent, 11.90 percent, and 15.40 percent, respectively.

What is the stock price for Red, Incorporated? What is the stock price for Yellow Corporation?

4. Hudson Corporation will pay a dividend of $2.80 per share next year. The company pledges to increase its dividend by 5.80 percent per year indefinitely. If you require a return of 8.80 percent on your investment, how much will you pay for the company's stock today?

Multiple Choice $18.13 $97.07 $93.33 $89.60 $88.22

5. Metallica Bearings, Incorporated, is a young start-up company. No dividends will be paid on the stock over the next 9 years because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $14 per share 10 years from today and will increase the dividend by 3 percent per year thereafter. If the required return on this stock is 8 percent, what is the current share price?

Multiple Choice $147.07 $129.69 $133.07 $140.07 $144.27