Question
1.P. Noel Company's common stock has just paid a $1.00 dividend.If investors believe that the expected rate of return on P. Noel is 9% and
1.P. Noel Company's common stock has just paid a $1.00 dividend.If investors believe that the expected rate of return on P. Noel is 9% and that dividends will grow at the rate of 3% per year for the foreseeable future, what is the value of a share of P. Noel stock?
2.Butler, Inc.'s return on equity is 12% and management retains 60% of earnings for investment purposes. Based on this information, what will be the firm's growth rate?
3.The GAP's most recent earnings per share were $3. Analysts forecast next year's earnings per share at $3.25. If the appropriate P/E ratio is 20, what is the value of GAP stock?
4.Home Depot stock is currently selling for $60 per share. Next year's dividend is expected to be $2; next year's earnings per share are expected to be $4.50. Calculate Home Depot's P/E ratio.
5. National Grit's preferred stock has a par value of $100, sells for $120 and pays $8 each year in dividends. What is the required rate of return?
6.Payday Loan Co. issued preferred stock that pays a $6 annual dividend.If the required return on the preferred stock is 8 percent, what is the maximum price an investor should pay for the preferred stock?
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