1)The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 20% a year for the next four years and then decreasing the growth rate to 5% per year. The company just paid its annual dividend in the amount of $1.00 per share. What is the current value of one share if the required rate of return is 9.25%??

2) The Extreme Reaches Corp. last paid a $1.50 per share annual dividend. The company is planning on paying $3.00, $5.00, $7.50, and $10.00 a share over the next four years, respectively. After that the dividend will be a constant $2.50 per share per year. What is the market price of this stock today if the market rate of return is 15%? Also estimate the dividend yield over the first year.

2b)Continue form previous problem. What is the market price of this stock in one year? What is the capital gains yield over the first year?

3) Rite Bite Enterprise sells toothpicks. Gross revenue last year was $3 million, and total costs were $1.5 million. Rite Bite has 1 million shares of common stock outstanding. Gross revenues and costs are expected to grow at 5% per year. Rite Bite pays no income taxes. All earnings are paid out as dividends. If the discount rate is 15% and all cash flows are received at years end, what is the price per share of Rite Bite stock?

4)Grott and Perrin, Inc., has expected earnings of $3 per share for next year. The firm's ROE is 20%, and its earnings retention ratio is 70%. If the firm's market rate of return is 15%, what is the present value of its growth opportunities? What is the market value per share of Grott and Perrin, Inc.?

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