Question
4. The stock of MTY Golf World currently sells for $133.75 per share. The firm has a constant dividend growth rate of 7% and just
4. The stock of MTY Golf World currently sells for $133.75 per share. The firm has a constant dividend growth rate of 7% and just paid a dividend of $6.25. If the required rate of return is 12%, what will the stock sell for one year from now?
A) $127.06
B) $133.75
C) $143.11
D) $149.80
E) $152.78
5. The current price of XYZ stock is $50.00. Dividends are expected to grow at 7% indefinitely and the most recent dividend was $1. What is the required rate of return on XYZ stock?
A) 9.0%
B) 9.1%
C) 9.3%
D) 10.6%
E) 11.2%
6. Killnum Corp. announces that the dividend for the next year will be $2.50 per share rather than the originally expected $1.50 per share. From then on, it is expected that dividends will resume their historical constant growth rate of 5% per year. What would you expect to happen to the price of the stock? Ignore any tax effects.
A) The price will likely double.
B) The price will likely rise by less than 100%.
C) The price will likely rise by exactly 50%.
D) The price will remain unchanged.
E) The price will likely rise by the present value of $1.
7. McIver's Meals, Inc. currently pays a $1.00 annual dividend. Investors believe that dividends will grow at 15% next year, 10% annually for the two years after that, and 5% annually thereafter. Assume the required return is 10%. What is the current market price of the stock?
A) $21.77
B) $22.99
C) $25.09
D) $26.13
E) $27.65
plz choose an answer and explain why with formula
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