1.a: Compute the dividends, prices, and the present value of each of the dividends at the end of each period.

D0= $1.00 , stock's last closing price $14.71 , earnings and dividends will grow constantly at g= 3.00% , the stock's price will grow at 3.00% , and at equilibrium the required rate or return is 10%.

(The dividend received in period 1 is D1 = $1.00 X (1+0.0300)=$1.03)

Period	Dividend	Price	PV of dividend at 10.00%
	(Dollars)	(Dollars)	(Dollars)
0	$1.00	$14.71
1	1.03
2
3
4
5

b: The dividend yield for period 1 is (3%, 7%, or 10%) and it will (be the same in? or vary?) each period.

c: The capital gain yield expected during period 1 is (3%, 7%, or 10%?) and it will (be the same in? or vary?) each period.

2. If it is forecasted that the total return equals 10.00% for the next 5 years, what is the forecasted total return out to infinity? (3.00% or 7.00% or 10.00% or 13.00%?)

3. Suppose that the growth rate is expected to be 2.00%. In this case, the stocks forecasted intrinsic value would be (greater than, less than, or equal to?) its current price, and the stock would be a (buy or sell?).