13. Savickas Petroleums stock has a required return of 12%, and the stock sells for $40 per share. The firm just paid a dividend of $1, and the dividend is expected to grow by 30% per year for the next 4 years. After t = 4, the dividend is expected to grow at a constant rate of X% per year forever. What is the stocks expected constant growth rate after t = 4, i.e., what is X? *

a) 5.17%

b) 5.44%

c) 5.72%

d) 6.34%

None of the above

14. Company X offers a common stock that pays an annual dividend of $3 a share. The company has promised to maintain a constant dividend. How much are you willing to pay for one share of this stock if you want to earn a 10% return on your investment? *

a) $33

b) $32

c) $30

d) $28

None of the above

15. The common stock of Bruner Aeronautics sells for $80 a share. The stock expects to pay $2 per share next month when the annual dividend is distributed. The company has established a pattern of increasing their dividends by 2% annually. What is the market rate of return on this stock? *

a) 4.5%

b) 2.5%

c) 2%

d) 4%

None of the above

16. Fletcher Companys current stock price is$36.00, its last dividend was $2.40, and its required rate of return is 12%. If dividends are expected to grow at a constant rate, g, in the future and if rs is expected to remain at 12%, what is Fletchers expected stock price 5 years from now? *

a) $45.95

b) $46.95

c) $47.95

d) $48.24

None of the above