1. You have found the following stock quote for RJW Enterprises, Inc., in the financial pages of todays newspaper. 52-WEEK YLD VOL NET HI LO STOCK (DIV) % PE 100s CLOSE CHG 92.13 47.97 RJW 2.20 2.5 15 19,657 ?? .49 What was the closing price for this stock that appeared in yesterdays paper? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Yesterdays closing price $ If the company currently has 25 million shares of stock outstanding, what was net income for the most recent four quarters? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Net income $

2. In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the terminal stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $1.30. The dividends are expected to grow at 12 percent over the next five years. In five years, the estimated payout ratio is 34 percent and the benchmark PE ratio is 24.

What is the target stock price in five years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Target stock price

$

What is the stock price today assuming a required return of 11 percent on this stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Stock price

$

3. The Perfect Rose Co. has earnings of $1.55 per share. The benchmark PE for the company is 11.

What stock price would you consider appropriate? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Stock price

$

What if the benchmark PE were 14? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Stock price

$