Question
1. You observe that company A has just paid its most recent dividend D0= $.46 and the company's shares are selling in the market for
1. You observe that company A has just paid its most recent dividend D0= $.46 and the company's shares are selling in the market for p0= $35.00 today. it is expected that the price of the share will increase p1=$38.00 and that the dividend at the end of the year will be D1=$.50. what is the stocks total expected return for the coming year?
2. a firm just paid a dividend of $1.00 per share. the dividend is expected to grow at a constant rate of 4% per year forever. the firms beta is 1.30, the market risk premium is 6%, and the risk free rate is 3%. what is the firms current stock price?
3. a firm just paid a dividend d0= $2.00. analysts expected the firm's dividend to grow by 25% this year, by 20% in year 2, and then at a constant rate of 12%, what is the current stock price?
4. a firm plans to issue a $50 par value perpetual preferred stock with an annual dividend of $6.50 per share. if the required return is 6.5%, at what price should this preferred stock sell for?
5. Alberta industrial Ltd. plans to issue a $100 par value perpetual preferred stock with an annual dividend of $5.00 per share. if the required return is 10.59% at what price should this preferred stock sell for?
6. Canada Corp paid a $4 dividend last year. if the dividend is expected to grow in perpetuity by 3% and your required rate of return is 15%, what is the max price you would pay for this stock?
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