16) The company is expected to pay a dividend of $5 a year. The growth rate is 4% and investors require a 12% return to compensate them from the risk of owning the stock. What price should the stock trade at? Select one:

a.$61.6

b.$69

c.$62.5

d.$64.8

17) The company is expected to pay a dividend of $5 a year. The growth rate is 4% and investors require a 12% return to compensate them from the risk of owning the stock. What price should the stock sell for at the end of year 4 (the start of 5 year on the time line) and everything else remains the same? Select one:

a.$61.6

b.$62.5

c.$64.8

d.$73.12

18) The company is expected to pay a dividend of $5 a year. The growth rate is 4% and investors require a 12% return to compensate them from the risk of owning the stock. What price should the stock sell for at the end of year 4 (the start of 5 year on the time line) and everything else remains the same.

What is the holding period return due to the capital gain over four year period? Select one:

a.16.99%

b.13.21%

c.15.66%

d.17.2%

19) Zoom has had an amazing surge of popularity during the pandemic, which in turn has led the price to rise. Assume that Zoom just paid a dividend of $1.00. Analysts expect the dividend to grow by 25% this year, 20% next year and then settle down to a long run growth rate of 4%. If investors require a 15% return, what price should Zoom stock trade at?

Select one:

a.$15.25

b.$14.18

c.$12.94

d.$14.25

e.None of the above are correct

20) A stock just paid a dividend of $2.40. The dividend is expected to grow at a rate of 5% forever. If the stock is currently selling for $25.00, what return do investors require to hold this stock?

Select one:

a.15%

b.16%

c.17%

d.18%

e.20%