1.Crosby Inc. has an 11% required rate of return. It will not pay any dividend until the end of year 20 at which time it will begin to pay an annual dividend of $4.00 per share which it will hold constant thereafter. What is an estimate of the price of Crosby's stock TODAY?

A.

$5.01

B.

$36.36

C.

$4.44

D.

$32.76

2.

If Temple Lunch Trucks dividend was expected to grow at a constant rate of 5% instead of 4%, what is the most that you should be willing to pay for a share of this stock today?

A.

$52.50.

B.

$47.50

C.

$50.00

D.

$43.78

3.

True or False: Ceteris

paribus ,

dividend growth rates and stock prices are directly related.

a)True

b)False