1. Toiletry Products, Inc. manufactures diapers. As their target customers age and pass on, sales of the product are expected to increase. Past statistics suggest that earnings and dividends will increase at a rate of 4% annually forever. The firm just paid a dividend of $2.50. Given a required return of 12%, the stock should sell for a. $10.25 b. $12.50 c. $15.00 d. $16.25 e. $32.50 2. How much are you willing to pay for a stock that is expected to pay a $1.50 dividend in one year if the expected dividend growth rate is 5.5% and you require a 16% return on your investment? a. $11.54 b. $12.33 c. $12.43 d. $13.14 e. $14.30 3. The preemptive right is important to shareholders because it a. allows management to sell additional shares below the current market price b. protects the current shareholders against dilution of ownership interests c. is included in every corporate charter d. will result in higher dividends per share e. the preemptive right is not important to shareholders