1.

You are interested in a stock that just paid an annual dividend of $3.40. The corporate management announced that future dividends will increase by 6.00% annually.

What is the amount of expected divided in year 5?

2.

Red stock just paid $2.50 in dividends per share. If the required return is 4.50% and the dividends are expected to grow at 2.4%, how much is this stock worth today?

3.

Apple stock just paid $4.50 in dividends per share. If the required return is 7.25% and the dividends are expected to grow at 2.4%, what is the expected value of this stock in 10 years?

4.

You are offered a preferred stock that pays a constant dividend of $5.70/share.

How much you should pay for this stock if your required return is 5.80%?

5.

You are analyzing a stock that has the following returns given the various states of economy.

State of Economy	Probability	Return
Recession	0.12	-4.50
Normal	0.68	6.80
Boom	0.2	15.80

What is the expected return on this stock? (Round your answer to the nearest hundredth; two decimal places)

6.

You own a portfolio consisting of five securities as follows:

Security	Number of shares	Price/share	Expected Return
A	200	$ 16.00	17.40%
B	300	$ 12.00	12.10%
C	400	$ 14.00	4.80%
D	500	$ 10.00	11.70%
E	600	$ 20.00	24.30%

What is the expected return of this portfolio?

(Round your answer to the nearest hundredth; two decimal places)

7.

Google just paid an annual divided of $2.15 per share, with a plan to increase it by 2% per year indefinitely.

What is ABC's cost of equity if its current stock price is $51.90?

(Round your answer to the nearest hundredth; two decimal places)

8.

HP corp. has 20,000 shares of common stocks outstanding that are currently traded for $13 per share and have a rate of return of 5.70%. They also have 4,000 shares of 5.75% preferred stocks that are selling for $69.5 per share. The preferred stock has a par value of $100. Finally, they have 7,000 bonds outstanding that mature in 11 years, have par value (face value) of $1,000, and sell for 97.5% of par. The yield-to-maturity on the debt is 4.70%.

What is the HP's weighted average cost of capital if the tax rate is 21%?

(Use two decimal places when solving this problem)