1.Favorita Candy's stock is expected to earn $3.10 per share this year. Its P/E ratio is 17. What is the stock price?(Round your answer to 2 decimal places.)

STOCK PRICE:

2.Preferred Products has issued preferred stock with an annual dividend of $8.25 that will be paid in perpetuity.

a.If the discount rate is 11%, at what price should the preferred sell?(Round your answer to 2 decimal places.)

b.At what price should the stock sell 1 year from now?(Round your answer to 2 decimal places.)

3.

Arts and Crafts, Inc. will pay a dividend of $7 per share in 1 year. It sells at $70 a share, and firms in the same industry provide an expected rate of return of 14%. What must be the expected growth rate of the company's dividends?(Do not round intermediate calculations. Enter your answer as a whole percent.)

EXPECTED GROWTH RATE: %

4.Steady As She Goes Inc. will pay a year-end dividend of $2.80 per share. Investors expect the dividend to grow at a rate of 4% indefinitely.

a.If the stock currently sells for $28.00 per share, what is the expected rate of return on the stock?(Do not round intermediate calculations. Enter your answer as a whole percent.)

EXPECTED RATE OF RETURN: %

b.If the expected rate of return on the stock is 16.50%, what is the stock price?(Do not round intermediate calculations. Enter your answers rounded to 2 decimal places.)

STOCK PRICE:

5.

No-Growth Industries pays out all of its earnings as dividends. It will pay its next $3 per share dividend in a year. The discount rate is 12%.

a.What is the price-earnings ratio of the company?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

b.What would the P/E ratio be if the discount rate were 10%?(Round your answer to 2 decimal places.)

6.

Stormy Weather has no attractive investment opportunities. Its return on equity equals the discount rate, which is 5%. Its expected earnings this year are $3 per share. Complete the following table.(Leave no cells blank. Enter a zero, wherever necessary. Do not round intermediate calculations. Round growth rate to two decimal places.)

PLOWBACK RATIO:GROWTH RATE: STOCK PRICEL: STOCK PRICE: P/E:

FOR EACH:

A.0%

B.0.40

C.0.80